Acadia Healthcare Company Annual Report 2023

FY2023 Annual Report · Acadia Healthcare Company
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Annual Report to Stockholders

2023About the Company
Acadia is a leading provider of behavioral healthcare services across the United States. As of December 31, 

2023, Acadia operated a network of 253 behavioral healthcare facilities with approximately 11,200 beds in  

38 states and Puerto Rico. With approximately 23,500 employees serving more than 75,000 patients daily,  

Acadia is the largest stand-alone behavioral healthcare company in the U.S. Acadia provides behavioral 

healthcare services to its patients in a variety of settings, including inpatient psychiatric hospitals, specialty 

treatment facilities, residential treatment centers and outpatient clinics.

Financial Highlights

(In thousands, except per share amounts) 
Revenue 
Adjusted EBITDA (1) 
Adjusted EBITDA excluding income from provider relief fund (1) 

Net (loss) income attributable to Acadia Healthcare Company, Inc. 
Adjusted income attributable to Acadia Healthcare Company, Inc. (1) 
Adjusted income attributable to Acadia Healthcare Company, Inc.
      excluding income from provider relief fund (1) 

Per diluted share:
  Net (loss) income attributable to Acadia Healthcare Company, Inc. 
  Adjusted income attributable to Acadia Healthcare Company, Inc. (1)  
  Adjusted income attributable to Acadia Healthcare Company, Inc.

      excluding income from provider relief fund (1) 

Weighted average diluted shares outstanding 

Cash and cash equivalents 
Property and equipment, net 
Total assets 
Total debt 
Stockholders’ equity 

(1) Please see page VII for a reconciliation of GAAP and non-GAAP results.

       Year Ended December 31,

2023 
$  2,928,738 
677,653 
$ 
671,234 
$ 

$ 
$ 

$ 

$ 
$ 

$ 

(21,667) 
320,187 

315,509 

(0.24) 
3.49 

3.44 
90,949 

100,073 
$ 
  2,266,610 
  5,358,841 
  1,371,767 
  2,781,974 

2022

$  2,610,399
615,099
$ 
593,648
$ 

$ 
$ 

$ 

$ 
$ 

$ 

$ 

273,139
290,974

275,343

2.98
3.18

3.01
91,555

97,649
1,952,045
4,987,901
1,385,791
2,812,727

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fellow Stockholders

We are proud of the outstanding ﬁnancial and operational performance for Acadia in 2023, afﬁrming our role as the nation’s 
leading pure-play provider of behavioral health services. With solid execution, we continued to meet our performance objectives 
and delivered another year of strong growth. More importantly, we stayed true to our goal of addressing a critical need in 
our nation and making a positive difference in the communities we serve.  We are proud of the important work we are doing 
and extremely grateful for our dedicated employees and clinicians who continue to provide safe, quality patient care for those 
seeking treatment for mental health and substance use issues. 

The prevalence of behavioral health issues and related deaths is on the rise and the disease burden continues to intensify in our 
nation. A recent survey by the Centers for Disease Control and Prevention estimated that more than one in ﬁve U.S. adults, or 
nearly 60 million people, live with a mental illness, and over 46 million people have substance use disorders. And, unfortunately, 
this disease burden continues to accelerate.  For example, in the most recent data year alone, the number of Americans with 
serious mental illness increased nine percent and the number who died from drug overdoses increased by four (cid:85)(cid:73)(cid:80)(cid:86)(cid:84)(cid:66)(cid:79)(cid:69) deaths. 

Simultaneously, U.S. behavioral health treatment capacity remains insufﬁcient in many areas. Expert clinicians estimate that 
approximately 75,000 additional inpatient psychiatric beds are required across the country to meet projected care needs. To cite 
another example, 87 percent of Americans with opioid use disorder, or OUD, do not receive evidence-based treatment.

Acadia is uniquely positioned to meet this growing unmet need. This is due in part to our impressive scale and national footprint 
of 253 facilities supporting more than 75,000 patients daily. Another differentiator is the breadth of our service lines, which span 
the full spectrum from acute psychiatric hospital care to residential treatment centers for substance abuse and mental health 
to partial hospitalization, intensive outpatient programs, and outpatient medication-assisted treatment. With our approach to 
providing comprehensive and integrated care, strong focus on clinical quality, and a proven operating model, we have a solid 
foundation and the right strategy in place to capitalize on additional growth opportunities and deliver signiﬁcant, sustainable 
value creation.

Strong Demand Drives 2023 Financial and Operating Results  
Acadia produced strong ﬁnancial and operating results in 2023 with impressive top line growth and solid volume trends. The 
momentum in our business reﬂects the robust demand for behavioral healthcare services and our proven ability to meet this 
demand with favorable outcomes. Our total revenues for the year were $2.93 billion, an increase of 12.2 percent compared with 
$2.61 billion in 2022.  We saw same facility revenue growth of 12.0 percent compared to 2022, including a 6.5 percent increase 
in revenue per patient day and a 5.1 percent increase in patient days. We also continued to maintain a strong ﬁnancial position, 
ending the year with $100.1 million in cash and cash equivalents as of December 31, 2023, and $516.5 million available under our 
revolving credit facility with a net leverage ratio of approximately 1.9x.  

In addition to delivering our solid ﬁnancial and operating performance, we made signiﬁcant improvements to our operations that 
will strengthen our core capabilities and further enhance Acadia’s care delivery.  We continue to focus on quality across our 
operations, leveraging technology and utilizing data to mitigate risk, drive efﬁciencies and support strong clinical outcomes.  

We were also pleased to see consistent improvement in our labor trends throughout 2023. While we beneﬁtted from a stronger 
macro labor market, our initiatives to drive higher employee engagement and more operational consistency in our facilities 
have enhanced our ability to attract and retain employees in a competitive market. We have focused on more extensive clinical 
training and adherence to best practices and evidence-based protocols while investing in technology tools that support Acadia 
employees and clinicians across our 253 facilities. We have also had a stronger emphasis on our beneﬁts and progressive career 
development opportunities for employees at all levels of our facilities.  We commend our employees for an outstanding job in 
meeting the higher patient demand and effectively managing our operations in 2023. 

38574 Acadia Healthcare-PROD.indd   5

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I

Solid Execution Across Five Deﬁned Growth Pathways
For 2023, we made signiﬁcant progress towards meeting our strategic growth objectives and extended our market reach, adding 
a total of 595 beds through our ﬁve deﬁned growth pathways: 

(cid:81)(cid:3) Our ﬁrst pathway centers around facility expansions by adding beds to our existing facilities across our network. This 

pathway allows us to leverage the existing infrastructure and experienced staff and efﬁciently expand services in established 
markets. In support of this growth pathway, we added 302 beds to existing facilities in 2023, in line with our stated goal to 
add approximately 300 beds.  For 2024, we expect to accelerate our growth through this pathway and add more than 400 beds 
through facility expansions.

(cid:81)(cid:3) For our second pathway, we continued to focus on developing wholly owned de novo facilities in underserved markets for 
behavioral healthcare services. At the end of 2023, we opened the newly renovated 101-bed adult hospital as part of the 
Montrose Behavioral Health Hospital in Chicago, Illinois. We also completed construction of our 80-bed inpatient hospital, 
Coachella Valley Behavioral Health, located in Indio, California, which we expect to open later in 2024. 

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38574 Acadia Healthcare-PROD.indd   6

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Patient Safety and Quality Care are Top Priorities 
As we continue to extend our market reach, patient safety and quality patient care remain our top priorities for delivering the 
best possible outcome for our patients. Quality is foundational to every aspect of the work we do at Acadia and drives operational 
effectiveness. Our quality initiatives are focused on providing industry leading care to the patients we serve every day and 
supporting our Acadia clinical teams through leadership development and thorough, competency-based training and building 
proactive tools for identifying risks and opportunities and effective responses. 

In 2023, we focused on making signiﬁcant technology investments to further strengthen our core capabilities, improve quality 
and enable us to deliver stronger clinical outcomes. Our recent investments in electronic medical records, or EMRs, have helped 
support our clinical staff with improved retention, employee satisfaction and workﬂow efﬁciencies. Implemented with valuable 
insight from our medical, nursing and clinical leaders, our optimized EMR ensures we translate the best of behavioral science 
into practice for every patient. In addition, we have now implemented patient-monitoring technology in 53 facilities, promoting 
higher touch care for fewer incidents and enhanced patient safety. These investments also provide access to predictive analytics 

38574 Acadia Healthcare-PROD.indd   7

(cid:23)(cid:18)(cid:23)(cid:18)(cid:21)(cid:23)(cid:3)(cid:3)(cid:3)(cid:22)(cid:29)(cid:22)(cid:20)(cid:592)(cid:51)(cid:48)

III

and quality data that provide a better framework for value-based care. The ability to measure and validate outcomes is especially 
important for collaborating with payors who are very focused on clinical health outcomes for their members. We will continue to 
look for ways to leverage technology that supports long-term operational excellence across our network, including technology 
that further enhances employee safety and engagement.

Looking Ahead
In 2023, The World Health Organization recognized the importance of mental health as a universal human right. This theme 
is fundamental to Acadia’s mission, and our focus of ensuring access to industry-leading, high-quality care for all those in 
need of our services.  As the nation’s largest pure-play behavioral health provider, we are committed to applying our 
recognized scale and expertise to help set the standards for care that address the escalating demand for behavioral health 
and substance use treatment. We continue to look for opportunities and innovations that support patients across the continuum 
of care and help to expand the scope of services provided. Our results for 2023 demonstrate our ability to execute our strategy 
with favorable results.  As we look to 2024, our strategic priorities are to fuel facility growth, accelerate expansion across the 
care continuum and continue to strengthen our capabilities and deliver the highest quality patient care for those who come to 
us for treatment. 

We look forward to the opportunities ahead for Acadia as we continue to lead the behavioral health industry in 2024 and beyond. 
We acknowledge Acadia’s 23,500 dedicated employees across our 253 facilities who are the reason for our past success and 
provide us with conﬁdence for the future.  We are also profoundly grateful for the support of our extraordinary leadership team 
and Board of Directors.  Together, we will pursue our shared mission to provide high quality care to our patients and support the 
communities we serve.

Thank you for the support your investment provides.

Sincerely,

Christopher H. Hunter
Chief Executive Ofﬁcer and Director

38574 Acadia Healthcare-PROD.indd   8

(cid:23)(cid:18)(cid:23)(cid:18)(cid:21)(cid:23)(cid:3)(cid:3)(cid:3)(cid:22)(cid:29)(cid:22)(cid:20)(cid:592)(cid:51)(cid:48)

IV

Safe Harbor

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

We have based these forward-looking statements on our current expectations, assumptions, estimates and projections. While we believe 
these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and 
involve known and unknown risks, uncertainties and other factors, many of which are outside of our control, which could cause our 
actual results, performance or achievements to differ materially from any results, performance or achievements expressed or implied 
by such forward-looking statements.

Given these risks and uncertainties, you are cautioned not to place undue reliance on such forward-looking statements.  
These risks and uncertainties may cause our actual future results to be materially different than those expressed in our forward-looking 
statements. Additional risks and uncertainties are described more fully in “Risk Factors” in periodic reports 
 and other filings with the Securities and Exchange Commission. These forward-looking statements are made only as of the 
date of this letter. 

We do not undertake and specifically decline any obligation to update any such statements or to publicly announce the results of any 
revisions to any such statements to reflect future events or developments.

V

Comparative Performance Graph 

The following graph compares the cumulative total stockholder return on the Company’s common stock with (a) the performance 
of a broad equity market indicator and (b) the performance of a published industry index or peer group. Historically, we have used 
the NASDAQ U.S. Stocks Benchmark Index as our broad equity market indicator and the NASDAQ Health Care Providers Index as 
our peer group. In 2022, we selected the S&P 500 as our broad equity market index as we believe it is more commonly used by 
investors relative to our prior index. We also selected the S&P Health Care Services Select Industry Index because we believe it 
is more representative of healthcare companies that we view as our peers for comparison, benchmarking and other purposes. We 
have included the performance of both equity market indices and peer group indices below. The graph assumes the investment 
on December 31, 2018, of $100 and that all dividends were reinvested at the time they were paid. The table following the graph 
presents the corresponding data for December 31, 2018, and each subsequent fiscal year end.

$350 –

$300 –

$250 –

$200 –

$150 –

$100 –

$50 –

$0 –

12/31/18

12/31/19

12/31/20

12/31/21

12/31/22

12/31/23

Acadia Healthcare Company, Inc.

Nasdaq U.S. Stocks Benchmark

Nasdaq Health Care Providers

S&P Health Care Services Select Industry Index

S&P 500 Index

Acadia Healthcare Company, Inc. 
Nasdaq U.S. Stocks Benchmark Index 
Nasdaq Health Care Providers 
S&P Health Care Services Select Industry Index 
S&P 500 Index 

12/31/18 
100.00 
100.00 
100.00 
100.00 
100.00 

12/31/19 
129.20 
131.17 
120.86 
119.18 
131.49 

12/31/20 
195.44 
159.07 
35.33 
159.48 
155.68 

12/31/21 
236.01 
200.26 
45.07 
175.42 
200.37 

12/31/22 
320.03 
160.75 
45.44 
140.90 
164.08 

12/31/23
302.26
203.23
45.49 
148.19
207.21

VI

 
Acadia Healthcare Company, Inc.

Reconciliation of Net (Loss) Income Attributable to Acadia Healthcare Company, Inc. to Adjusted EBITDA (Unaudited)

    Year Ended December 31,

(In thousands) 
Net (loss) income attributable to Acadia Healthcare Company, Inc. 
Net income attributable to noncontrolling interests 
(Benefit from) provision for income taxes  
Interest expense, net 
Depreciation and amortization 
EBITDA 

Adjustments: 
  Equity-based compensation expense (a) 
  Transaction, legal and other costs  (b) 
  Legal settlements expense (c) 
  Loss on impairment (d) 
  Gain on sale of property (e) 
Adjusted EBITDA 
Adjusted EBITDA margin 

Income from provider relief fund 
Adjusted EBITDA excluding income from provider relief fund 
Adjusted EBITDA margin excluding income from provider relief fund 

2023 
 $  (21,667) 
6,006  
(9,699) 
82,125  
  132,349  
 189,114  

32,289  
62,026  
394,181  
9,790  
(9,747) 
$  677,653  
23.1% 

(6,419) 
$  671,234  
22.9% 

2022
$  273,139 
6,894 
  94,110 
 69,760 
    117,769 
 561,672 

 29,635 
 23,792 
—
 — 
 — 
$  615,099 
23.6%

 (21,451)
 $  593,648 
22.7%

VII

 
 
 
   
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
  
 
  
 
 
 
 
 
 
 
  
 
 
Reconciliation of Net (Loss) Income Attributable to Acadia Healthcare Company, Inc. to Adjusted Income Attributable to Acadia 
Healthcare Company, Inc. (Unaudited)

(In thousands, except per share amounts)  
Net (loss) income attributable to Acadia Healthcare Company, Inc. 

    Year Ended December 31,

2023 
(21,667) 

$ 

2022

$  273,139

Adjustments to income: 
  Transaction, legal and other costs (b) 
  Legal settlements expense (c) 
  Loss on impairment (d) 
  Gain on sale of property (e) 

(Benefit from) provision for income taxes  

Adjusted income before income taxes attributable to  
  Acadia Healthcare Company, Inc. 
Income tax effect of adjustments to income (f) 
Adjusted income attributable to Acadia Healthcare Company, Inc. 
Income from provider relief fund, net of taxes 
Adjusted income attributable to Acadia Healthcare Company, Inc. 
  excluding income from provider relief fund 

62,026  
  394,181  
9,790  
(9,747) 
(9,699) 

  424,884  
  104,697  
  320,187  
 (4,678) 

  23,792
  — 
  — 
  — 
  94,110 

 391,041 
 100,067 
 290,974 
  (15,631)

$  315,509  

$  275,343 

Weighted-average shares outstanding - diluted (g) 

91,826  

 91,555 

Adjusted income attributable to Acadia Healthcare Company, Inc. 
  per diluted share 
Income from provider relief fund, net of taxes, per diluted share 
Adjusted income attributable to Acadia Healthcare Company, Inc., 
  excluding income from provider relief fund, per diluted share 

 $3.49  
(0.05) 

$3.44  

 $3.18 
  (0.17)

 $3.01 

VIII

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Footnotes

We have included certain financial measures in this annual report, including those listed below, which are “non-GAAP financial measures” as 
defined under the rules and regulations promulgated by the SEC.  These non-GAAP financial measures include, and are defined, as follows: 

•   EBITDA: net (loss) income attributable to Acadia Healthcare Company, Inc. adjusted for net income attributable to noncontrolling interests, 

(benefit from) provision for income taxes, net interest expense and depreciation and amortization.

•  Adjusted EBITDA: EBITDA adjusted for equity-based compensation expense, transaction, legal and other costs, legal settlements expense, 

loss on impairment and gain on sale of property.

•  Adjusted EBITDA excluding income from provider relief fund: Adjusted EBITDA adjusted for income from provider relief fund.
•  Adjusted EBITDA margin: Adjusted EBITDA divided by revenue.
•   Adjusted EBITDA margin excluding income from provider relief fund: Adjusted EBITDA excluding income from provider relief fund divided 

by revenue.

•  Adjusted income before income taxes attributable to Acadia Healthcare Company, Inc.: net (loss) income attributable to Acadia Healthcare 
Company, Inc. adjusted for transaction, legal and other costs, legal settlements expense, loss on impairment, gain on sale of property and 
(benefit from) provision for income taxes.

•  Adjusted income attributable to Acadia Healthcare Company, Inc.: Adjusted income before income taxes attributable to Acadia Healthcare 

Company, Inc. adjusted for the income tax effect of adjustments to income.

•   Adjusted income attributable to Acadia Healthcare Company, Inc. excluding income from provider relief fund: Adjusted income attributable 

to Acadia Healthcare Company, Inc. adjusted for income from provider relief fund.

•  Net leverage ratio: Long-term debt (excluding $10.4 million of unamortized debt issuance costs, discount and premium) less cash and cash 

equivalents divided by Adjusted EBITDA for the trailing twelve months. 

The non-GAAP financial measures presented herein are supplemental measures of our performance and are not required by, or presented 
in accordance with, generally accepted accounting principles in the United States (“GAAP”). The non-GAAP financial measures presented 
herein are not measures of our financial performance under GAAP and should not be considered as alternatives to net income or any other 
performance measures derived in accordance with GAAP or as an alternative to cash flow from operating activities as measures of our 
liquidity. Our measurements of these non-GAAP financial measures may not be comparable to similarly titled measures of other companies. 
We have included information concerning the non-GAAP financial measures in this annual report because we believe that such information is 
used by certain investors as measures of a company’s historical performance. We believe these measures are frequently used by securities 
analysts, investors and other interested parties in the evaluation of issuers of equity securities, many of which present similar non-GAAP 
financial measures when reporting their results. Because the non-GAAP financial measures are not measurements determined in accordance 
with GAAP and are thus susceptible to varying calculations, the non-GAAP financial measures, as presented, may not be comparable to other 
similarly titled measures of other companies. Our presentation of these non-GAAP financial measures should not be construed as an inference 
that our future results will be unaffected by unusual or nonrecurring items.   

(a)  Represents the equity-based compensation expense of Acadia.   
(b)  Represents transaction, legal and other costs incurred by Acadia primarily related to legal, management transition, termination, 

restructuring, acquisition and other similar costs. 

(c)  Represents legal settlements expense related to the Desert Hills litigation. 
(d)  During the  year ended December 31, 2023, we recorded non-cash impairment charges totaling $9.8 million,  related to the closure of 

certain facilities. 

(e)  Represents gain on facility property sale. 
(f)  Represents the income tax effect of adjustments to income based on tax rates of  24.6% and 25.6% for the years ended December 31, 2023 

and 2022, respectively. 

(g)  For the year ended December 31, 2023, approximately 0.9 million outstanding shares or restricted stock units and shares of common stock 
issuable upon exercise of outstanding stock option awards have been included in the calculation of weighted-average shares outstanding-
diluted. These shares are excluded from the calculation of diluted earnings per share in the condensed consolidated statement of 
operations because the net loss for the year ended December 31, 2023 causes such securities to be anti-dilutive. 

IX

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
[ This page left intentionally blank. ]

UNITED STATES 
SECURITIES AND EXCHANGE COMMISSION 
Washington, D.C. 20549 
FORM 10-K 

(Mark One) 
☒  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 

For the fiscal year ended December 31, 2023 
or 
☐  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 

For the transition period from                      to                      

Commission File Number: 001-35331 

ACADIA HEALTHCARE COMPANY, INC. 

(Exact name of registrant as specified in its charter) 

Delaware 
(State or other jurisdiction of 
incorporation or organization) 

45-2492228 
(I.R.S. Employer 
Identification No.) 

6100 Tower Circle, Suite 1000 
Franklin, Tennessee 37067 
(Address, including zip code, of registrant’s principal executive offices) 
(615) 861-6000 
(Registrant’s telephone number, including area code) 
Securities registered pursuant to Section 12(b) of the Act: 

Title of each class 
Common Stock, $.01 par value 

Trading Symbol 
ACHC 

Name of exchange on which registered 
NASDAQ Global Select Market 

Securities registered pursuant to Section 12(g) of the Act: None 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ☒    No  ☐ 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  ☐    No  ☒ 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during 
the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 
90 days.    Yes  ☒    No  ☐ 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of 
Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    
No  ☐ 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an 
emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 
12b-2 of the Exchange Act. 

Large accelerated filer 
Non-accelerated filer 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or 

Accelerated filer 
Smaller reporting company 

Emerging growth company 

☐ 
☐ 

☒ 
☐ 

☐ 

revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐ 

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over 
financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.  
☒ 

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing 

reflect the correction of an error to previously issued financial statements. ☐ 

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by 

any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐ 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒ 
As of June 30, 2023, the aggregate market value of the shares of common stock of the registrant held by non-affiliates was approximately $7.1 billion, based on 

the closing price of the registrant’s common stock reported on the NASDAQ Global Select Market of $79.64 per share. 

As of February 28, 2024, there were 92,289,068 shares of the registrant’s common stock outstanding. 

Portions of the registrant’s definitive proxy statement for its 2024 annual meeting of stockholders to be held on May 23, 2024 are incorporated by reference into 

Part III of this Form 10-K. 

DOCUMENTS INCORPORATED BY REFERENCE 

 
 
 
 
 
 
 
 
  
 
 
  
  
 
 
 
 
 
 
 
 
 
 
 
ACADIA HEALTHCARE COMPANY, INC. 
ANNUAL REPORT ON FORM 10-K 
TABLE OF CONTENTS 

PART I 

  Item 1. Business 
  Item 1A. Risk Factors 
  Item 1B. Unresolved Staff Comments 
  Item 1C. Cybersecurity 
  Item 2. Properties 
  Item 3. Legal Proceedings 
  Item 4. Mine Safety Disclosures 

PART II 

  Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity 

Securities 

  Item 6. [Reserved] 
  Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 
  Item 7A. Quantitative and Qualitative Disclosures About Market Risk 
  Item 8. Financial Statements and Supplementary Data 
  Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 
  Item 9A. Controls and Procedures 
  Item 9B. Other Information 
  Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 

PART III 

  Item 10. Directors, Executive Officers and Corporate Governance 
  Item 11. Executive Compensation 
  Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 
  Item 13. Certain Relationships and Related Transactions, and Director Independence 
  Item 14. Principal Accountant Fees and Services 

PART IV 

  Item 15. Exhibits and Financial Statement Schedules 
  Item 16. Form 10-K Summary 
  SIGNATURES 

1
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32
33
33
33

34
34
35
47
48
48
48
48
48

49
49
50
50
50

51
54
55

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
Unless the context otherwise requires, all references in this Annual Report on Form 10-K to “Acadia,” “the Company,” “we,” 

“us” or “our” mean Acadia Healthcare Company, Inc. and its consolidated subsidiaries. 

PART I 

Item 1. Business. 

Overview 

Our business strategy is to become the indispensable behavioral healthcare provider for the high-acuity and complex needs 

patient population. We are committed to providing the communities we serve with high-quality, cost-effective behavioral healthcare 
services, while growing our business, increasing profitability and creating long-term value for our stockholders. This strategy includes 
five growth pathways: expansions of existing facilities, joint venture partnerships, de novo facilities, acquisitions and expansion across 
our continuum of care. At 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 
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.”). 

Management believes that we are positioned as a leading platform in a highly fragmented industry under the direction of an 
experienced management team that has significant industry expertise. Management expects to take advantage of several strategies that 
are more accessible as a result of our increased size and geographic scale, including continuing a national marketing strategy to attract 
new patients and referral sources, increasing our volume of out-of-state referrals, providing a broader range of services to new and 
existing patients and clients and selectively pursuing opportunities to expand our facility and bed count in the U.S. through 
acquisitions, wholly-owned de novo facilities, joint ventures and bed additions in existing facilities. 

Our common stock is listed for trading on The NASDAQ Global Select Market under the symbol “ACHC.” Our principal 

executive offices are located at 6100 Tower Circle, Suite 1000, Franklin, Tennessee 37067, and our telephone number is (615) 861-
6000. 

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. 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 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). At the time of the acquisition, CenterPointe operated four 
acute inpatient hospitals with 306 beds and ten outpatient locations primarily in Missouri. 

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. The Revolving Facility further provides for a $20.0 million subfacility for the issuance of letters of credit . See “Item 
7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” for 
additional information about the Credit Facility.  

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 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. 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. 

During the year ended December 31, 2022, we repaid $95.0 million of the balance outstanding on the Revolving Facility. 

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”). 

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.    

On March 1, 2021, we satisfied and discharged the indentures governing the 6.500% Senior Notes due 2024 (the “6.500% 
Senior Notes”). 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. 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. Sale allowed us to reduce our indebtedness and focus on our U.S. operations. We report, for all 
periods presented, results of operations and cash flows of the U.K. operations as discontinued operations in the accompanying 
financial statements. 

Additional information about our U.K. operations and the U.K.’s behavioral healthcare industry can be found in our prior filings 

with the SEC. 

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. 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. According to a 2022 survey by the Substance Abuse and Mental Health Services 

Administration (“SAMHSA”) of the U.S. Department of Health and Human Services (the “HHS”), mental illness and substance use 
disorder prevalence continues to break previous year records. In 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. 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. 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.  

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. 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. 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 October 21, 2018, the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients 
and Communities Act (the “SUPPORT Act”) was signed into law. The SUPPORT Act expands Medicare coverage to include Opioid 
Treatment Programs for services provided on or after January 2, 2020. 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. 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. 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, providing a 
broader range of services to new and existing patients and clients and selectively pursuing opportunities to expand our facility and bed 
count. 

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. 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. As we receive Medicaid payments from 45 states, the District of Columbia and Puerto 
Rico, management does not believe that we are significantly affected by changes in reimbursement policies in any one state or 
territory. 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. We believe that our increased geographic diversity 
will mitigate the impact of any financial or budgetary pressure that may arise in a particular state or market where we operate. 

Strong financial position to execute our strategy. Management believes we continue to be in a strong position for investments 
in our facilities, expansion into new and existing markets and enhancement of our capabilities and infrastructure. We generate strong 
returns by profitably operating our business and by actively managing our working capital. 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.  

Business Strategy 

Our strategy is to become the indispensable behavioral healthcare provider for the high-acuity and complex needs patient 

population. We are committed to providing the communities we serve high-quality, cost-effective behavioral healthcare services, 
while growing our business and creating long-term value for our stockholders. This strategy includes five growth pathways: 
expansions of existing facilities, joint venture partnerships, de novo facilities, acquisitions and expansion across our continuum of 
care. Our core strategic priorities include: 

Drive organic growth of existing facilities. We seek to increase revenue at our facilities by providing a broader range of 
services to new and existing patients and clients. In addition, management intends to increase bed counts in our existing facilities. We 
added 302 beds to existing facilities during the year ended December 31, 2023 and expect to add more than 400 beds to existing 
facilities for the year ending 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. 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 have positioned the Company as a leading provider of behavioral healthcare services in the U.S. The behavioral 
healthcare industry in the U.S. is highly fragmented, and we selectively seek opportunities to expand and diversify our base of 
operations by acquiring additional facilities, entering into partnerships with healthcare providers to develop additional facilities and 
developing wholly-owned de novo facilities in attractive markets. 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. For the year ending December 31, 2024, we expect to add approximately 800 beds 
through the opening of wholly-owned and joint venture facilities and open up to 14 CTCs. 

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. 
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. 

Our growth strategy includes a patient-centric approach covering the full continuum of care for behavioral healthcare services. By 
providing cohesive care across sites and levels of care, we are able to best serve the most complex patient populations. We are 
working to reach underserved patient populations by expanding our breadth of services and increasing access points.  

Operations 

Our facilities and services can generally be classified into the following categories: acute inpatient psychiatric facilities; 
specialty treatment facilities; CTCs; and residential treatment centers. Outpatient programs associated with our facilities are included 
within each respective service line. The table below presents the percentage of our total revenue attributed to each category for the 
year ended December 31, 2023: 

Facility/Service 
Acute inpatient psychiatric facilities 
Specialty treatment facilities 
Comprehensive treatment centers 
Residential treatment centers 

Revenue for the 
Year Ended December 31, 2023 

51%
21%
17%
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. 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. 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 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. 

Acute Inpatient Psychiatric Facilities 

Acute inpatient psychiatric facilities provide a high level of care in order to stabilize patients that are either a threat to 
themselves or to others. The acute setting provides 24-hour observation, daily intervention and monitoring by psychiatrists. Our 
facilities that offer acute care services provide evaluation and crisis stabilization of patients with severe psychiatric diagnoses through 
a medical delivery model that incorporates structured and intensive medical and behavioral therapies with 24-hour monitoring by a 
psychiatrist, psychiatric trained nurses, therapists and other direct care staff. Typical lengths of stay for crisis stabilization and acute 
care range from three to five days and from five to twelve days, respectively. 

Specialty Treatment Facilities 

Our specialty treatment facilities include residential recovery facilities and eating disorder facilities. We provide a 

comprehensive continuum of care for adults with addictive disorders and co-occurring mental disorders. Our detoxification, inpatient, 
partial hospitalization and outpatient treatment programs are cost-effective and give patients access to the least restrictive level of care. 
All programs offer individualized treatment in a supportive and nurturing environment. 

The majority of our specialty treatment services are provided to patients who abuse addictive substances such as alcohol, illicit 

drugs or opiates, including prescription drugs. Some of our facilities also treat other addictions and behavioral disorders such as 
chronic pain, sexual compulsivity, compulsive gambling, mood disorders, emotional trauma and abuse. The goal of our treatment 
facilities is to provide the appropriate level of treatment to an individual no matter where they are in the lifecycle of their disease in 
order to restore the individual to a healthier, more productive life, free from dependence on illicit substances and destructive 
behaviors. Our treatment facilities provide a number of different treatment services such as assessment, detoxification, medication-
assisted treatment, counseling, education, lectures and group therapy. We assess and evaluate the medical, psychological and 
emotional needs of the patient and address these needs in the treatment process. Following this assessment, an individualized 
treatment program is designed to provide a foundation for a lifelong recovery process. Many modalities are used in our treatment 
programs to support the individual, including the twelve-step philosophy, cognitive/behavioral therapies, supportive therapies and 
continuing care. 

Residential Recovery Facilities. Our residential recovery facilities house and care for patients over an extended period and 
typically treat patients from a broadly defined regional market. We provide three basic levels of residential treatment depending on the 
severity of the patient’s addiction and/or behavioral disorder. 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. The least intensive service is where the patient visits the facility 
for just a few hours a week to attend counseling/group sessions. 

Following primary treatment, our extended care programs typically offer residential care, which allows patients to develop 
healthy and appropriate living skills while remaining in a safe and nurturing setting. Patients are supported in their recovery by a semi-
structured living environment that allows them to begin the process of employment or to pursue educational goals and to take personal 
responsibility for their recovery. The structure of this treatment phase is monitored by a primary therapist who works with each patient 
to integrate recovery skills and build a foundation of sobriety with a strong support system. Length of stay will vary depending on the 
patient’s needs. 

Our outpatient clinics serve patients that do not require inpatient treatment or are transitioning from a residential treatment 

program; have employment, family or school commitments; and have stabilized in their recovery practices and are seeking ongoing 
continuing care. 

Eating Disorder Facilities. Our eating disorder facilities provide treatment services for eating disorders, each of which may be 

effectively treated through a combination of medical, psychological and social treatment programs. 

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. Medication-assisted treatment 
combines behavioral therapy and medication to treat substance use disorders. CTCs primarily utilize medication-assisted treatment to 
individuals addicted to opiates such as opioid analgesics (prescription pain medications). Our professional staff can provide a broad 
range of patient services, including personalized treatment plans, medication management, medication dispensing, individual therapy, 
group therapy, peer support, vocational training and social support services. 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. The facilities balance therapy 

activities with social, academic and other activities. Because the setting is less intensive, demands on staffing, security and oversight 
are generally lower than inpatient psychiatric facilities. Over time, however, residential treatment centers have continued to serve 
increasingly severe patients who would have been treated in acute care facilities in earlier years. 

We provide residential treatment care through a medical model residential treatment facility, which offers intensive, medically-
driven interventions and individualized treatment regimens designed to deal with moderate to high level patient acuity. Children and 
adolescents admitted to these facilities typically have had multiple prior failed treatment plans, severe physical, sexual and emotional 
abuse, termination of parental custody, substance abuse, marked deficiencies in social, interpersonal and academic skills and a wide 
range of psychiatric disorders. Treatment typically is provided by an interdisciplinary team coordinating psychopharmacological, 
individual, group and family therapy, along with specialized accredited educational programs in both secure and unlocked 
environments. Lengths of stay range from three months to several years. 

Certain of our residential treatment centers provide group home and therapeutic group home programs. Our group home 
programs provide family-style living for youths in a single house or apartment within residential communities where 24-hour staff 
provide supervision and support. The goal of a group home program is to teach family living and social skills through individual and 
group counseling sessions within a real-life environment. The residents are encouraged to take responsibility for the home and their 
health as well as actively take part in community functions. Most attend an accredited and licensed on-premises school or a local 
public school. We also operate therapeutic group homes that provide comprehensive treatment services for seriously, emotionally 
disturbed adolescents. 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. 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. Contractual adjustments and discounts are based on contractual agreements, 
discount policies and historical experience. Implicit price concessions are based on historical collection experience. See “Item 7. 
Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies — Revenue 
and Accounts Receivable” for additional disclosure. Other information related to our revenue, income and other operating information 
is provided in our Consolidated Financial Statements. 

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. 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.  

Licensing, Certification and Accreditation 

All of our facilities must comply with various federal, state and local licensing and certification regulations and undergo 
periodic inspection by licensing agencies to certify compliance with such regulations. 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. Federal, state and local agencies survey our facilities on a regular basis to determine 
whether the facilities are in compliance with regulatory operating and health standards and conditions for participating in government 
healthcare programs. 

Most of our inpatient and residential facilities maintain accreditation from private entities, such as The Joint Commission or the 
Commission on Accreditation of Rehabilitation Facilities (“CARF”). The Joint Commission and CARF are private organizations that 
have accreditation programs for a broad spectrum of healthcare facilities. The Joint Commission accredits a broad variety of 
healthcare organizations, including hospitals and behavioral healthcare organizations. CARF accredits behavioral healthcare 
organizations providing mental health and alcohol and drug use and addiction services, as well as opiate treatment programs, and 
many other types of healthcare programs. These accreditation programs are intended generally to improve the quality, safety, 
outcomes and value of healthcare services provided by accredited facilities. Certain federal and state licensing agencies as well as 
many government and private healthcare payment programs require that providers be accredited as a condition of licensure, 
certification or participation. Accreditation is typically granted for a specified period, ranging from one to three years, and renewals of 
accreditation generally require completion of a renewal application and an on-site renewal survey. 

Certificates of Need 

Many of the states in which we operate facilities have enacted certificate of need (“CON”) laws that regulate the construction or 

expansion of certain healthcare facilities, certain capital expenditures or changes in services or bed capacity. Failure to obtain CON 
approval of certain activities can result in: our inability to complete an acquisition, expansion or replacement; the imposition of civil 
penalties; the inability to receive Medicare or Medicaid reimbursement; or the revocation of a facility’s license, any of which could 
harm our business. 

Audits 

Our healthcare facilities are also subject to federal, state and commercial payor audits to validate the accuracy of claims 
submitted to government healthcare programs and commercial payors. 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. While no such audit has identified any material overpayment liability, should a potential material overpayment 
liability arise from a future audit, such overpayment liability may ultimately exceed established reserves, and any excess could 
potentially be substantial. 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 may be found to 
have been violated if at least one purpose of the remuneration is to induce or reward referrals. A provider is not required to have actual 
knowledge or specific intent to commit a violation of the Anti-Kickback Statute to be found guilty of violating the law. 

The Office of Inspector General of the HHS (the “OIG”) has issued safe harbor regulations that protect certain types of common 
arrangements from prosecution or sanction under the Anti-Kickback Statute. The fact that conduct or a business arrangement does not 
fall within a safe harbor does not automatically render the conduct or business arrangement illegal under the Anti-Kickback Statute. 
However, conduct and business arrangements falling outside the safe harbors may lead to increased scrutiny by government 
enforcement authorities. In December of 2020, the OIG finalized revisions to the Anti-Kickback Statute safe harbors and created new 
safe harbors for value-based care that became effective January 19, 2021. The new regulations are intended to improve patient care 
and foster innovative care models by easing regulatory burdens to coordinated and value-based care. 

Although management believes that our arrangements with physicians and other referral sources comply with current law and 

available interpretative guidance, as a practical matter it is not always possible to structure our arrangements so as to fall squarely 
within an available safe harbor. Where that is the case, we cannot guarantee that applicable regulatory authorities will determine these 
financial arrangements do not violate the Anti-Kickback Statute or other applicable laws, including state anti-kickback laws, although 
we do structure such arrangements to meet as many of the safe harbor requirements as possible.  

In addition to the Anti-Kickback Statute, the federal Physician Self-Referral Law, also known as the Stark Law, prohibits 
physicians from referring Medicare patients to healthcare entities with which they or any of their immediate family members have a 
financial relationship for the furnishing of any “designated health services” unless certain exceptions apply. A violation of the Stark 
Law may result in a denial of payment, required refunds to the Medicare program, the imposition of statutory civil monetary penalties 
of up to $15,000 for each prohibited claim and up to $100,000 for circumvention schemes, exclusion from government healthcare 
programs and liability under the False Claims Act. 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. As with the changes 
made to the Anti-Kickback Statute, the new Stark exceptions are intended to improve patient care and foster innovative care models 
by easing regulatory burdens to coordinated and value-based care.  

Management believes that our financial arrangements with physicians are structured to comply with the regulatory exceptions to 

the Stark Law. However, the Stark Law is a strict liability statute, meaning that no intent is required to violate the law, and even a 
technical violation may lead to significant penalties. 

These laws and regulations are extremely complex and, in many cases, we do not have the benefit of regulatory or judicial 
interpretation. It is possible that different interpretations or enforcement of these laws and regulations could subject our current or past 
practices to allegations of impropriety or illegality or could require us to make changes in our arrangements relating to facilities, 
equipment, personnel, services, capital expenditure programs and operating expenses. A determination that we have violated one or 
more of these laws, or the public announcement that we are being investigated for possible violations of one or more of these laws, 
could have a material adverse effect on our business, financial condition or results of operations. In addition, we cannot predict 
whether other federal or state legislation or regulations will be adopted, what form such legislation or regulations may take or what 
their impact on us may be. 

The SUPPORT Act contains a number of provisions aimed at identifying at-risk individuals, increasing access to opioid abuse 

treatment, reducing overprescribing and promoting data sharing with the primary goal of reducing the use and abuse of opioids. 
Additionally, the SUPPORT Act attempts to address the problem of “patient brokering” in the context of addiction treatment facilities 
and sober living homes.  

One section of the SUPPORT Act, the Eliminating Kickbacks in Recovery Act (“EKRA”), makes it a federal crime to 
knowingly and willfully: (1) solicit or receive any remuneration in return for referring a patient to a recovery home, clinical treatment 
facility or laboratory; or (2) pay or offer any remuneration to induce such a referral or in exchange for an individual using the services 
of a recovery home, clinical treatment facility, or laboratory. Each conviction under EKRA is punishable by up to $200,000 in 
monetary damages, imprisonment for up to ten (10) years, or both. Unlike the Anti-Kickback Statute, EKRA is not limited to services 
reimbursable under a government healthcare program. 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. 

If we are deemed to have failed to comply with the Anti-Kickback Statute, the Stark Law, EKRA or other applicable laws and 

regulations, we could be subjected to liabilities, including criminal penalties, civil penalties and exclusion of one or more facilities 
from participation in the government healthcare programs. 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. Under the False Claims Act, the government may fine any person or entity that, 
among other things, knowingly submits, or causes the submission of, false or fraudulent claims for payment to the federal government 
or knowingly and improperly avoids or decreases an obligation to pay money to the federal government. The federal government has 
widely used the False Claims Act to prosecute Medicare and other federal healthcare program fraud such as coding errors, billing for 
services not provided, submitting false cost reports and providing care that is not medically necessary or that is substandard in quality. 
Claims for services or items rendered in violation of the Anti-Kickback Statute or the Stark Law can provide a basis for liability under 
the False Claims Act as well. The False Claims Act is also implicated by the knowing failure to report and return an overpayment 
within 60 days of identifying the overpayment or by the date a corresponding cost report is due, whichever is later. 

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. These private 
parties, known as relators, are entitled to share in any amounts recovered by the government, and, as a result, whistleblower lawsuits 
have increased significantly in recent years. Many states have similar false claims statutes that impose liability for the types of acts 
prohibited by the False Claims Act or that otherwise prohibit the submission of false or fraudulent claims to the state government or 
Medicaid program. 

In addition to the False Claims Act, the federal government may use several criminal laws, such as the federal mail fraud, wire 

fraud or healthcare fraud statutes, to prosecute the submission of false or fraudulent claims for payment to the federal government. 
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. 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. 

HIPAA Administrative Simplification and Privacy and Security Requirements 

The administrative simplification provisions of the Health Insurance Portability and Accountability Act (“HIPAA”), as amended 
by the Health Information Technology for Economic and Clinical Health Act (“HITECH”), require the use of uniform electronic data 
transmission standards for healthcare claims and payment transactions submitted or received electronically. These provisions are 
intended to encourage electronic commerce in the healthcare industry. HIPAA also established federal rules protecting the privacy and 
security of individually identifiable protected health information (“PHI”). The privacy and security regulations control the use and 
disclosure of PHI and the rights of patients to be informed about and control how such PHI is used and disclosed. Violations of 
HIPAA can result in both criminal and civil fines and penalties. 

The HIPAA security regulations require healthcare providers to implement administrative, physical and technical safeguards to 

protect the confidentiality, integrity and availability of PHI. HITECH has strengthened certain HIPAA rules regarding the use and 
disclosure of PHI, extended certain HIPAA provisions to business associates and created security breach notification requirements 
including notifications to the individuals affected by the breach, the HHS, and in certain cases, the media. HITECH has also increased 
maximum penalties for violations of HIPAA privacy rules. Management believes that we have been in material compliance with the 
HIPAA regulations and have developed our policies and procedures to ensure ongoing compliance, although we cannot guarantee that 
our facilities will not be subject to security incidents or breaches which could have a material adverse effect on our business, financial 
condition or results of operations. 

The Emergency Medical Treatment & Labor Act 

The Emergency Medical Treatment & Labor Act (“EMTALA”) is intended to ensure public access to emergency services 
regardless of ability to pay. Section 1867 of the Social Security Act imposes specific obligations on Medicare-participating hospitals 
that offer emergency services to provide a medical screening examination when a request is made for examination or treatment for an 
emergency medical condition regardless of an individual’s ability to pay. Hospitals are then required to provide stabilizing treatment 
for patients with emergency medical conditions. If a hospital is unable to stabilize a patient within its capability, or if the patient 
requests, an appropriate transfer must be implemented. EMTALA imposes additional obligations on hospitals with specialized 
capabilities, such as ours, to accept the transfer of patients in need of such specialized capabilities if those patients present in the 
emergency room of a hospital that does not possess the specialized capabilities. 

Mental Health Parity Legislation 

The MHPAEA was signed into law in October 2008 and requires health insurance plans that offer mental health and addiction 
coverage to provide that coverage on par with financial and treatment coverage offered for other illnesses. 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 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 21st Century Cures Act. The 21st 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 

CARES Act provided over $2 trillion in stimulus benefits for the U.S. economy. Among other things, the CARES Act included 
additional support for small businesses, expanded unemployment benefits, made forgivable loans available to small businesses, 
provided for certain federal income tax changes, and provided $500 billion for loans, loan guarantees, and other investments for or in 
U.S. businesses. 

In addition, the CARES Act contained a number of provisions intended to assist healthcare providers combat the effects of the 

global pandemic of the novel coronavirus known as COVID-19 (“COVID-19”). Those provisions included, among others: 

 

 

 

an appropriation to the Public Health and Social Services Emergency Fund (“PHSSE Fund”), also known as the Provider 
Relief Fund, to reimburse, through grants or other mechanisms, eligible healthcare providers and other approved entities 
for COVID-19-related expenses or lost revenue;  

the expansion of CMS’ Accelerated and Advance Payment Program;  

the temporary suspension of Medicare sequestration from May 1, 2020 to March 31, 2022, which was reduced to 1% on 
April 1, 2022, and was eliminated effective July 1, 2022; and 

  waivers or temporary suspension of certain regulatory requirements. 

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”). Among other things, the PPP Act allocated $75 billion to eligible healthcare providers to help 
offset COVID-19 related losses and expenses. The $75 billion allocated under the PPP Act was in addition to the $100 billion 
allocated to healthcare providers for the same purposes in the CARES Act and was disbursed to providers under terms and conditions 
similar to the CARES Act funds. In 2020, we received approximately $34.9 million of the funds distributed from the PHSSE Fund. 
During the fourth quarter of 2020, we recorded approximately $32.8 million of income from provider relief fund related to PHSSE 
Fund amounts received in 2020. 

In 2021, we received $24.2 million of additional funds from the PHSSE Fund. During the fourth quarter of 2021, we recorded 

$17.9 million of income from provider relief fund related to PHSSE Fund amounts received. During the year ended December 31, 
2022, we received $7.7 million of additional funds from the PHSSE Fund and $14.2 million from the American Rescue Plan (“ARP”) 
Rural Payments for Hospitals. During the year ended December 31, 2022, we recorded $21.5 million of income from provider relief 
fund related to PHSSE Fund amounts and 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 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. 

Healthcare providers were required to sign an attestation confirming receipt of the PHSSE Fund amounts and agree to the terms 
and conditions of payment. 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. 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. Of the $45.2 million of advance payments received in 2020, we repaid approximately $25.1 million of advance 
payments during 2021 and made additional repayments of approximately $20.1 million during the year ended December 31, 2022, to 
eliminate the liability.  

Under the CARES Act, we received a 2% increase in our facilities’ Medicare reimbursement rate as a result of the temporary 

suspension of Medicare sequestration from May 1, 2020 to March 31, 2022, which was reduced to 1% on April 1, 2022, and was 
eliminated effective July 1, 2022. 

9 

 
The CARES Act also provided for certain federal income and other tax changes. We received a cash benefit of approximately 

$39.3 million for 2020 relating to the delay of payment of the employer portion of Social Security payroll taxes. We repaid half of the 
$39.3 million of payroll tax deferrals during the third quarter of 2021 and repaid the remaining portion in the third quarter of 2022 to 
eliminate the liability.  

The regulatory changes related to the CARES Act were temporary and expired at the end of the COVID-19 public health 

emergency on May 11, 2023.           

Corporate Integrity Agreement 

During the second quarter of 2019, we entered into a corporate integrity agreement (the “CIA”) with the OIG imposing certain 
compliance obligations on us and our subsidiary, CRC Health, LLC. For further discussion of the background of this matter and the 
CIA, see “Item 1A. Risk Factors — 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”.  

Risk Management and Insurance  

The healthcare industry in general continues to experience an increase in the frequency and severity of litigation and claims. As 
is typical in the healthcare industry, we are subject to claims that our services have resulted in injury to our patients or clients or other 
adverse effects. In addition, resident, visitor and employee injuries also subject us to the risk of litigation. While management believes 
that quality care is provided to patients and clients in our facilities and that we substantially comply with all applicable regulatory 
requirements, an adverse settlement determination in a legal proceeding or government investigation could have a material adverse 
effect on our business, financial condition or results of operations. 

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. 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. Our reinsurance receivables are recognized consistent with 
the related liabilities, and include known claims and any incurred but not reported claims that are covered by current insurance 
policies in place. 

Environmental Matters 

We are subject to various federal, state and local environmental laws that: (i) regulate certain activities and operations that may 
have environmental or health and safety effects, such as the handling, storage, transportation, treatment and disposal of medical waste 
products generated at our facilities, the identification and warning of the presence of asbestos-containing materials in buildings, as 
well as the removal of such materials, the presence of other hazardous substances in the indoor environment and protection of the 
environment and natural resources in connection with the development or construction of our facilities; (ii) impose liability for costs 
of cleaning up, and damages to natural resources from, past spills, waste disposals on and off-site, or other releases of hazardous 
materials or regulated substances; and (iii) regulate workplace safety. Some of our facilities generate infectious or other hazardous 
medical waste due to the illness or physical condition of our patients. The management of infectious medical waste is subject to 
regulation under various federal, state and local environmental laws, which establish management requirements for such waste. These 
requirements include record-keeping, notice and reporting obligations. Each of our facilities has an agreement with a waste 
management company for the disposal of medical waste. The use of such companies, however, does not completely protect us from 
violations of medical waste laws or from related third-party claims for clean-up costs. 

From time to time, our operations have resulted in, or may result in, non-compliance with, or liability pursuant to, environmental 
or health and safety laws or regulations. Management believes that our operations are generally in compliance with environmental and 
health and safety regulatory requirements, including legal requirements relating to climate change, or that any non-compliance will not 
result in a material liability or cost to achieve compliance. Historically, the costs of achieving and maintaining compliance with 
environmental laws and regulations at our facilities have not been material. However, we cannot assure you that future costs and 
expenses required for us to comply with any new or changes in existing environmental and health and safety laws and regulations or 
new or discovered environmental conditions will not have a material adverse effect on our business, financial condition or results of 
operations. In addition, we could be affected by climate change to the extent that climate change results in severe weather conditions 
or other disruptions impacting the communities in which our facilities are located. For more information regarding climate change and 
its possible adverse impact on us, see “Item 1A. Risk Factors — Operational Risks — Our business and operations are subject to risks 
related to natural disasters and climate change”. 

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. 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. 

New laws, regulations or policies or changes in existing laws, regulations or policies or their enforcement, future spills or 
accidents or the discovery of currently unknown conditions or non-compliances may give rise to investigation and remediation 
liabilities, compliance costs, fines and penalties, or liability and claims for alleged personal injury or property damage due to 
substances or materials used in our operations, any of which may have a material adverse effect on our business, financial condition or 
results of operations. 

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. 
An important part of our business strategy is to continue making targeted acquisitions of other behavioral healthcare facilities. 
However, the passage of mental healthcare parity legislation and increased demand for mental health services are likely to attract other 
potential buyers, including diversified healthcare companies, other pure-play behavioral healthcare companies and private equity 
firms. 

In addition to the competition we face for acquisitions, we must also compete for patients. Patients are referred to our behavioral 

healthcare facilities through a number of different sources, including healthcare practitioners, public programs, other treatment 
facilities, managed care organizations, unions, emergency departments, judicial officials, social workers, police departments and word 
of mouth from previously treated patients and their families, among others. 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. 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.  

Typically, our inpatient facilities are staffed by a chief executive officer, medical director, director of nursing, chief financial 

officer, clinical director and director of performance improvement. Psychiatrists and other physicians working in our facilities are 
licensed medical professionals who are generally not employed by us and work in our facilities as independent contractors or medical 
staff members. 

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. 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. 

Talent Acquisition, Development and Retention  

Our success is dependent on our ability to attract, develop and retain talented, dedicated employees. 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. We also conduct 
comprehensive employee satisfaction surveys to assess and ensure that we are responsive to the desires and concerns of our 
employees. 

Like most healthcare providers, our facilities have experienced rising labor costs and turnover, and we have resorted to using 
more expensive contract labor at certain of our facilities. In some markets, the availability and retention of qualified medical personnel 
have become significant operating issues to healthcare providers, including at certain of our facilities. Shortages of nurses, qualified 
addiction counselors and other medical and care support personnel could result in a number of adverse impacts to our business, 
including capacity and growth constraints, reduced patient satisfaction, reduced employee satisfaction, impact on services offered, and 
increased costs, among others. 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”. 

Health and Safety 

We are committed to providing care to our patients in a safe, therapeutic environment. In furtherance of this commitment, we 

provide our employees with access to a variety of workplace safety training programs and continually evaluate our policies promoting 
patient safety and employee wellbeing.  

During March 2020, COVID-19 began to affect our facilities, employees, patients, communities, business operations and 
financial performance, as well as the broader U.S. population, economy and financial markets. At many of our facilities, employees 
and/or patients have tested positive for COVID-19. In response to the COVID-19 pandemic, we implemented numerous changes to 
our policies and procedures to ensure the health of our patients, employees, contractors and communities, including instituting social 
distancing practices and protective measures throughout our facilities, which included restricting or suspending visitor access, 
screening patients and staff who enter our facilities based on criteria established by the CDC and local health officials, and testing and 
isolating patients when warranted. 

Seasonality of Demand for Services 

Our residential recovery and other inpatient facilities typically experience lower patient volumes and revenue during the 
holidays, and our child and adolescent facilities typically experience lower patient volumes and revenue during the summer months, 
holidays and other periods when school is out of session. 

Available Information 

Our Internet website address is www.acadiahealthcare.com. 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. The SEC maintains an internet site at http://www.sec.gov that contains reports, proxy and information 
statements, and other information we file. Our website and the information contained therein or linked thereto are not intended to be 
incorporated into this Annual Report on Form 10-K. 

Item 1A. Risk Factors 

Risk Factors Summary 

We are subject to a variety of risks and uncertainties, including financial risks, operational risks, human capital risks, legal 

proceedings and regulatory risks and certain general risks, which could have a material adverse effect on our business, financial 
condition, results of operations and cash flows. 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. 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. 

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. 

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. 

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. 

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. 

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. 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. 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. 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. As a result, we are limited in the amount we can record as revenue for our services from these 
government programs, and if we have a cost increase, we typically will not be able to recover this increase. In addition, the federal 
government and many state governments, are operating under significant budgetary pressures, and they may seek to reduce payments 
under their Medicaid programs for services such as those we provide. Government payors also tend to pay on a slower schedule. In 
addition to limiting the amounts they will pay for the services we provide their members, government payors may, among other 
things, impose prior authorization and concurrent utilization review programs that may further limit the services for which they will 
pay and shift patients to lower levels of care and reimbursement. Therefore, if governmental entities reduce the amounts they will pay 
for our services, if they elect not to continue paying for such services altogether, or if there is a significant contraction of the number 
of individuals covered by state Medicaid programs, our business, financial condition or results of operations could be adversely 
affected. In addition, if governmental entities slow their payment cycles further, our cash flow from operations could be negatively 
affected. 

Commercial payors such as managed care organizations, private health insurance programs and labor unions generally 
reimburse us for the services rendered to insured patients based upon contractually determined rates. These commercial payors are 
under significant pressure to control healthcare costs. In addition to limiting the amounts they will pay for the services we provide 
their members, commercial payors may, among other things, impose prior authorization and concurrent utilization review programs 
that may further limit the services for which they will pay and shift patients to lower levels of care and reimbursement. These actions 
may reduce the amount of revenue we derive from commercial payors. 

Changes in these government programs in recent years have resulted in limitations on reimbursement and, in some cases, 
reduced levels of reimbursement for healthcare services. Payments from federal and state government healthcare programs are subject 
to statutory and regulatory changes, administrative rulings, interpretations and determinations, requirements for utilization review, and 
federal and state funding restrictions, all of which could materially increase or decrease program payments, as well as affect the cost 
of providing service to patients and the timing of payments to facilities. We are unable to predict the effect of recent and future policy 
changes on our operations. In addition, since most states operate with balanced budgets and since the Medicaid program is often a 
state’s largest program, some states can be expected to enact or consider enacting legislation formulated to reduce their Medicaid 
expenditures. If the rates paid or the scope of services covered by government payors are reduced, there could be a material adverse 
effect on our business, financial condition and results of operations. 

In addition to changes in government reimbursement programs, our ability to negotiate favorable contracts with private payors, 
including managed care providers, significantly affects the financial condition and operating results of our facilities. Further, we may 
not be able to negotiate or sustain rate increases we have experienced in recent years, and may not be able to achieve consistent rate 
increases from year to year. Management expects third-party payors to aggressively manage reimbursement levels and cost controls. 
Reductions in reimbursement amounts received from third-party payors could have a material adverse effect on our business, financial 
condition and results of operations. 

Our healthcare facilities are also subject to federal, state and commercial payor audits to validate the accuracy of claims 
submitted to government healthcare programs and commercial payors. 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. While no such audit has identified any material overpayment liability, should a potential material overpayment 
liability arise from a future audit, such overpayment liability may ultimately exceed established reserves, and any excess could 
potentially be substantial. 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. 

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). See “Item 1. 
Business — Financing Transactions” for additional details regarding our outstanding indebtedness. 

Our debt could have important consequences to our business. For example, it could: 

 

 

 

 

 

 

 

 

 

 

increase our vulnerability to general adverse economic and industry conditions; 

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

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

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

expose us to interest rate fluctuations because the interest on the Credit Facility is imposed at variable rates; 

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

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

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

limit our ability to borrow additional funds; and 

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

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

Servicing our debt requires a significant amount of cash. Our ability to generate sufficient cash to service our debt depends on 
many factors beyond our control. 

Our ability to make payments on and to refinance our debt, to fund planned capital expenditures and to maintain sufficient 
working capital will depend on our ability to generate cash in the future. This, to a certain extent, is subject to general economic, 
financial, competitive, legislative, regulatory and other factors that are beyond our control. 

We cannot assure you that our business will generate sufficient cash flow from operations or that future borrowings will be 

available to us under the Credit Facility or from other sources in an amount sufficient to enable us to service our debt or to fund our 
other liquidity needs. If our cash flow and capital resources are insufficient to allow us to make scheduled payments on our debt, we 
may need to reduce or delay capital expenditures, sell assets, seek additional capital or restructure or refinance all or a portion of our 
debt on or before the maturity thereof, any of which could have a material adverse effect on our business, financial condition or results 
of operations. We cannot assure you that we will be able to refinance any of our debt on commercially reasonable terms or at all, or 
that the terms of that debt will allow any of the above alternative measures or that these measures would satisfy our scheduled debt 
service obligations. If we are unable to generate sufficient cash flow to repay or refinance our debt on favorable terms, it could 
significantly adversely affect our financial condition and the value of our outstanding debt. Our ability to restructure or refinance our 
debt will depend on the condition of the capital markets and our financial condition. 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. 

Our financing arrangements impose, and the terms of any future debt may impose, operating and other restrictions on us. 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. 

The Credit Facility also requires us to meet certain financial ratios, including a fixed charge coverage ratio and a consolidated 
leverage ratio. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity 
and Capital Resources — Credit Facility”. 

The restrictions may prevent us from taking actions that management believes would be in the best interests of our business, and 
may make it difficult for us to successfully execute our business strategy or effectively compete with companies that are not similarly 
restricted. We also may incur future debt obligations that might subject us to additional restrictive covenants that could affect our 
financial and operational flexibility. Our ability to comply with these covenants in future periods will largely depend on the pricing of 
our products and services, our success at implementing cost reduction initiatives and our ability to successfully implement our overall 
business strategy. We cannot assure you that we will be granted waivers or amendments to our financing arrangements if for any 
reason we are unable to comply with our financial covenants. The breach of any of these covenants and restrictions could result in a 
default under the indentures governing the Senior Notes or under the Credit Facility, which could result in an acceleration of our debt. 

Despite our current debt level, we may incur significant additional amounts of debt, which could further exacerbate the risks 
associated with our debt. 

In January 2024, we entered into the Second Amendment, which provides for the incurrence of $350.0 million of Incremental 

Term Loans. We may incur substantial additional debt, including additional notes and other debt, in the future. Although the 
indentures governing the Senior Notes and the Credit Facility contain restrictions on the incurrence of additional debt, these 
restrictions are subject to a number of significant qualifications and exceptions, and under certain circumstances, the amount of debt 
that could be incurred in compliance with these restrictions could be substantial. If new debt is added to our existing debt levels, the 
related risks that we now face would intensify and we may not be able to meet all our debt obligations. 

If we default on our obligations to pay our debt, we may not be able to make payments on our financing arrangements. 

Any default under the agreements governing our debt, including a default under the Credit Facility or the indentures governing 

the Senior Notes, and the remedies sought by the holders of such debt, could adversely affect our ability to pay the principal, premium, 
if any, and interest on the Senior Notes and substantially decrease the market value of the Senior Notes. If we are unable to generate 
sufficient cash flows and are otherwise unable to obtain funds necessary to meet required payments of principal, premium, if any, and 
interest on our debt, or if we otherwise fail to comply with the various covenants, including financial and operating covenants, in the 
instruments governing our debt (including the Credit Facility and the indentures governing the Senior Notes), we would be in default 
under the terms of the agreements governing such debt. In the event of such default, the holders of such debt could elect to declare all 
the funds borrowed thereunder to be due and payable, the lenders under the Credit Facility could elect to terminate their commitments 
or cease making further loans and institute foreclosure proceedings against our assets, or we could be forced to apply all available cash 
flows to repay such debt, and, in any such case, we could ultimately be forced into bankruptcy or liquidation. 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.  

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. 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. 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. 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. 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. 

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. The number of 
employees employed by us is primarily linked to the number of facilities we operate and the number of individuals cared for by us. 
While we have reduced the number of employees when occupancy rates decrease at our facilities and can continue to do so in the 
future, there is a limit on the extent to which this can be done without impacting the quality of our services. 

We also have a number of recurring costs including insurance, utilities and rental costs, and may face increases to other 
recurring costs such as regulatory compliance costs. There can be no assurance that any of our recurring costs will not grow at a faster 
rate than our revenue. As a result, any increase in our operating costs could have a material adverse effect on our business, results of 
operations and financial condition. 

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. 

Our business has in the past been, and may continue to be, affected by a number of factors that are beyond our control, such as 

general macroeconomic conditions, conditions in the financial services markets, geopolitical conditions and other general political and 
economic developments, and can continue to be affected by such factors in the future. In particular, we have historically financed 
acquisitions, the development of de novo and joint venture facilities and the modification of our existing facilities through a variety of 
sources, including our own cash reserves and debt financing. While we intend to seek to finance acquisitions and new and existing 
developments from similar sources in the future, there may be insufficient cash reserves to fund the budgeted capital expenditure and 
market conditions and other factors may prevent us from obtaining debt financing on appropriate terms or at all. In addition, market 
conditions may limit the number of financial institutions that are willing to provide financing to landlords with whom we wish to 
contract to build new healthcare facilities which can then be made available to us under a long-term operating lease. If conditions in 
the global economy remain uncertain or weaken further, this could materially adversely impact our average daily census (“ADC”), 
which would have a corresponding negative impact on our business, results of operations and financial condition. 

A worsening of the economic and employment conditions in the geographies in which we operate could materially affect our 
business and future results of operations. 

During periods of high unemployment, governmental entities often experience budget deficits as a result of increased costs and 

lower than expected tax collections. These budget deficits at the federal, state and local levels have decreased, and may continue to 
decrease, spending for health and human service programs, including Medicare and Medicaid, which are significant payor sources for 
our facilities. In periods of high unemployment, we have faced and could continue to face the risk of potential declines in the 
population covered under private insurance, patient decisions to postpone or decide against receiving behavioral healthcare services, 
potential increases in the uninsured and underinsured populations we serve and further difficulties in collecting patient co-payment 
and deductible receivables. 

A sizable portion of our revenue from certain residential recovery, eating disorder facilities, CTCs and youth programs is from 
self-payors. Accordingly, a sustained downturn in the U.S. economy could restrain the ability of our patients and the families of our 
students to pay for services. 

Furthermore, the availability of liquidity and capital resources to fund the continuation and expansion of many business 
operations worldwide has been limited in recent years. 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). 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. 

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. 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. Inflation has also resulted in higher interest rates, which in turn will result in higher costs of debt 
borrowing and could limit our growth strategy. 

The industry trend on value-based purchasing may negatively impact our revenue. 

There is a trend in the healthcare industry toward value-based purchasing of healthcare services, rather than per diem charges. 

These value-based purchasing programs include both public reporting of quality data and preventable adverse events tied to the quality 
and efficiency of care provided by facilities. Governmental programs including Medicare and Medicaid currently require hospitals to 
report certain quality data to receive full reimbursement updates. In addition, Medicare does not reimburse for care related to certain 
preventable adverse events. Many large commercial payors currently require hospitals to report quality data, and several commercial 
payors do not reimburse hospitals for certain preventable adverse events. 

We expect value-based purchasing programs, including programs that condition reimbursement on patient outcome measures, to 

become more common and to involve a higher percentage of reimbursement amounts. We are unable at this time to predict how this 
trend will affect our results of operations, but it could negatively impact our revenue if we are unable to meet quality standards 
established by both governmental and private payers. 

The trend by insurance companies and managed care organizations to enter into sole-source contracts may limit our ability to 
obtain patients. 

Insurance companies and managed care organizations are entering into sole-source contracts with healthcare providers, which 

could limit our ability to obtain patients since we do not offer the range of services required for these contracts. Moreover, private 
insurers, managed care organizations and, to a lesser extent, Medicaid and Medicare, are beginning to carve-out specific services, 
including mental health and substance abuse services, and establish small, specialized networks of providers for such services at fixed 
reimbursement rates. Continued growth in the use of carve-out arrangements could materially adversely affect our business to the 
extent we are not selected to participate in such networks or if the reimbursement rate in such networks is not adequate to cover the 
cost of providing the service. 

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.  

The global pandemic of COVID-19 has affected our facilities, employees, patients, communities, business operations and 
financial performance, as well as the broader U.S. economy and financial markets. Since 2020, COVID-19 resulted in fewer referrals 
to our facilities and lower voluntary admissions as individuals were less inclined to leave their homes and seek treatment. When 
employees and/or patients at a facility are infected with COVID-19, there is a risk that the virus will spread to others at the facility and 
impact the operations of such facility. COVID-19 is continuing to evolve and its full impact remains unknown and difficult to predict; 
however, it has adversely affected our business operations since 2020 and could negatively impact our financial performance in the 
future. 

We could experience supply chain disruptions and significant price increases in equipment, pharmaceuticals and medical 

supplies, which could cause delays in our ability to develop a de novo or joint venture facility or modify an existing facility. 
Pandemic-related staffing difficulties and equipment, pharmaceutical and medical supplies shortages may impact our ability to treat 
patients at our facilities. Such shortages could lead to us paying higher prices for supplies, equipment and labor and an increase in 
overtime hours paid to our employees.  

The steps we have taken to mitigate the financial impact of COVID-19 may not be successful, and we could experience material 

decreases in Adjusted EBITDA in 2023 or longer. In addition, we may need to take further steps to mitigate the financial impact of 
COVID-19, which actions could adversely affect our financial condition and results of operations. 

Broad economic factors resulting from COVID-19, including reduced consumer spending, could also negatively affect our 

payor mix, increase the relative proportion of lower margin services we provide and reduce patient volumes, as well as diminish our 
ability to collect outstanding receivables. Business closings and layoffs in the areas in which we operate may lead to increases in the 
uninsured and underinsured populations and adversely affect demand for our services, as well as the ability of patients and other 

18 

 
payors to pay for services as rendered. Any increase in the amount or deterioration in the collectability of patient accounts receivable 
will adversely affect our cash flows and results of operations, requiring an increased level of working capital. If general economic 
conditions continue to deteriorate or remain uncertain for an extended period of time, our liquidity and ability to repay our outstanding 
debt may be adversely affected. 

In addition, our results and financial condition may be further adversely affected by future federal or state laws, regulations, 
orders, or other governmental or regulatory actions addressing the current COVID-19 pandemic or the U.S. healthcare system, which, 
if adopted, could result in direct or indirect restrictions to our business. We may also be subject to negative press and/or lawsuits from 
patients, employees and others exposed to COVID-19 at our facilities. Such actions may involve large demands, as well as substantial 
costs to resolve. Our professional and general liability insurance may not cover all claims against us. 

The foregoing and other continued disruptions to our business as a result of the COVID-19 pandemic have impacted our 
business and may have a material adverse effect on our business, results of operations, financial condition, cash flows and our ability 
to service our indebtedness. 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. 

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. 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. Contractual adjustments and discounts are 
based on contractual agreements, discount policies and historical experience. Implicit price concessions are based on historical 
collection experience. 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. 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. 

We are required to maintain internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act. If we are 
unable to maintain adequate internal control over financial reporting, we may be unable to report our financial information on a timely 
basis, may suffer adverse regulatory consequences or violations of NASDAQ listing rules and may breach the covenants under our 
financing arrangements. There could also be a negative reaction in the financial markets due to a loss of investor confidence in us and 
the reliability of our financial statements. If we or our independent registered public accounting firm identify any material weakness in 
our internal control over financial reporting in the future (including any material weakness in the controls of businesses we have 
acquired), their correction could require additional remedial measures which could be costly, time-consuming and could have a 
material adverse effect on our business. 

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

We intend to retain our future earnings, if any, for use in our business or for other corporate purposes and do not anticipate that 

cash dividends with respect to common stock will be paid in the foreseeable future. Any decision as to the future payment of 
dividends will depend on our results of operations, financial position and such other factors as our board of directors, in its discretion, 
deems relevant. In addition, the terms of our debt substantially limit our ability to pay dividends. As a result, capital appreciation, if 
any, of our common stock will be a stockholder’s sole source of gain for the foreseeable future. 

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. 

Because many of the patients we treat suffer from severe mental health and chemical dependency disorders, patient incidents, 

including deaths, sexual abuse, assaults and elopements, have occurred in the past and could continue to occur in the future. As a 
result of adverse patient incidents, we have experienced admissions holds, adverse regulatory action, civil litigation, negative publicity 
and negative impacts on referrals. 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. Any such patient incident or adverse regulatory action could result in governmental investigations, 
judgments or fines and have a material adverse effect on our business, financial condition and results of operations. In addition, we 
have been and could become 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 and how our 
referral sources and payors view us. 

Joint ventures may use significant resources, may be unsuccessful and could expose us to unforeseen liabilities. 

As part of our growth strategy, we have completed, and have announced plans to complete, a number of joint ventures and 

strategic alliances. These joint ventures may involve significant cash expenditures, debt incurrence, additional operating losses and 
expenses, and compliance risks that could negatively impact our business, financial condition or results of operations. Further, there is 
often a significant delay between our formation of a joint venture and the time that a de novo facility can be constructed and have a 
positive financial impact on our results of operations. 

The nature of a joint venture requires us to consult with and share certain decision-making powers with unaffiliated third parties, 
some of which may be not-for-profit healthcare systems. If our joint venture partners do not fulfill their obligations, the affected joint 
venture may not be able to operate according to its business or strategic plans. In that case, our financial condition and results of 
operations may be materially adversely affected or we may be required to increase our level of financial commitment to the joint 
venture. Moreover, differences in economic or business interests or goals among joint venture participants could result in delayed 
decisions, failures to agree on major issues and even litigation. If these differences cause the joint ventures to deviate from their 
business or strategic plans, or if our joint venture partners take actions contrary to our policies, objectives or the best interests of the 
joint venture, our business, financial condition and results of operations could be negatively impacted. In addition, our relationships 
with not-for-profit healthcare systems and the joint venture agreements that govern these relationships are intended to be structured to 
comply with current revenue rulings published by the Internal Revenue Service, as well as case law relevant to joint ventures between 
for-profit and not-for-profit healthcare entities. Material changes in these authorities could adversely affect our relationships with not-
for-profit healthcare systems and related joint venture arrangements. 

Our ability to grow our business through organic expansion either by developing de novo or joint venture facilities or by modifying 
existing facilities is dependent upon many factors. 

Our ability to grow our business through organic expansion is dependent on capacity and occupancy at our facilities. Should 
our facilities reach maximum occupancy, we may need to implement other growth strategies either by developing de novo or joint 
venture facilities or by modifying existing facilities. 

Our facilities typically need to be purpose-designed in order to enable the type and quality of service that we provide. 
Consequently, we must either develop sites to create facilities or purchase or lease existing facilities, which may require substantial 
modification. We must be able to identify suitable sites and there is no guarantee that such sites will be available at all, or at an 
economically viable cost or in areas of sufficient demand for our services. The subsequent successful development and construction of 
a de novo or joint venture facility is contingent upon, among other things, negotiation of construction contracts, regulatory permits and 
planning consents and satisfactory completion of construction. Similarly, our ability to expand existing facilities is also dependent 
upon various factors, including identification of appropriate expansion projects, permitting, licensure, financing, integration into our 
relationships with payors and referral sources, and margin pressure as de novo and joint venture facilities are filled with patients. 

Delays caused by difficulties in respect of any of the above factors may lead to cost overruns and longer periods before a return 
is generated on an investment, if at all. We may incur significant capital expenditure but due to a regulatory, planning or other reason, 
may find that we are prevented from opening a de novo or joint venture facility or modifying an existing facility. Moreover, even 
when incurring such development capital expenditure, there is no guarantee that we can fill beds when they become available. Upon 
operational commencement of a de novo or joint venture facility, we typically expect that it will take 10 to 12 months, on average, to 
reach break-even results. 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. 

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. We summarize the most significant of 
these risks below. 

20 

 
Integration risks 

We must integrate our acquisitions with our existing operations. This process includes the integration of the various components 

of our business and of the businesses we have acquired or may acquire in the future, including the following: 

 

 

 

 

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

patients who may elect to switch to another behavioral healthcare provider; 

regulatory compliance programs; and 

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

Integrating a newly acquired facility could be expensive and time consuming and could disrupt our ongoing business, negatively 

affect cash flow and distract management and other key personnel from day-to-day operations. 

We may not be able to successfully combine the operations of acquired facilities with our operations, and even if such 
integration is accomplished, we may never realize the potential benefits of the acquisition. The integration of acquisitions with our 
operations requires significant attention from management, may impose substantial demands on our operations or other projects and 
may impose challenges on the combined business including, but not limited to, consistencies in business standards, procedures, 
policies, business cultures and internal controls and compliance. Certain acquisitions involve a capital outlay, and the return that we 
achieve on any capital invested may be less than the return that we would achieve on our other projects or investments. If we fail to 
complete the integration of acquired facilities, we may never fully realize the potential benefits of the related acquisitions. 

Successful integration depends on the ability to effect any required changes in operations or personnel, which may entail 

unforeseen liabilities. The integration of acquired businesses may expose us to certain risks, including the following: difficulty in 
integrating these businesses in a cost-effective manner, including the establishment of effective management information and financial 
control systems; unforeseen legal, regulatory, contractual, employment or other issues arising out of the combination; combining 
corporate cultures; maintaining employee morale and retaining key employees; potential disruptions to our on-going business caused 
by our senior management’s focus on integrating these businesses; and performance of the combined assets not meeting our 
expectations or plans. A failure to properly integrate these businesses could have a corresponding material adverse effect on our 
business, results of operations, financial condition or prospects. 

Benefits may not materialize 

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

Assumptions of unknown liabilities 

Facilities that we acquire may have unknown or contingent liabilities, including, but not limited to, liabilities for uncertain tax 

positions, liabilities for failure to comply with healthcare laws and regulations and liabilities for unresolved litigation or regulatory 
reviews. Although we typically attempt to exclude significant liabilities from our acquisition transactions and seek indemnification 
from the sellers of such facilities, the purchase agreement for some of our significant acquisitions contain minimal representations and 
warranties about the entities and business that we acquired. In addition, we have no indemnification rights against the sellers under 
some purchase agreements and all of the purchase price consideration was paid at closing. Therefore, we may incur material liabilities 
for the past activities of acquired entities and facilities. 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. 

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. Our principal competitors for acquisitions have 
included UHS and private equity firms. Also, suitable acquisitions may not be accomplished due to unfavorable terms. 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. In addition, we may have to pay cash, incur debt, or issue equity 
securities to pay for any such acquisition, which could adversely affect our financial results, result in dilution to our stockholders, 
result in increased fixed obligations or impede our ability to manage our operations. There can be no assurances that we will be able to 
acquire facilities at historical or expected rates or on favorable terms. 

Antitrust and other legal challenges 

We may face antitrust and other legal challenges when acquiring facilities or other businesses, which could negatively impact 

our ability to close acquisition transactions. Antitrust enforcement in the healthcare industry is currently a priority of the Federal Trade 
Commission, the Department of Justice and many state agencies, including with respect to hospital acquisitions. Additionally, many 
states require CONs in order to acquire a hospital or other healthcare facility. The acquisition of hospitals and other healthcare 
facilities also often requires licensure approvals or reviews and complex change of ownership processes for Medicare and other 
payers. The increasingly challenging antitrust enforcement environment and other regulatory review or approval processes could 
significantly delay or even prevent our ability to acquire facilities and other businesses and increase our acquisition costs, which could 
adversely affect our overall growth strategy. 

Managing growth 

Some of the facilities we have acquired or may acquire in the future may have had significantly lower operating margins prior to 

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

We incur significant transaction-related costs in connection with acquisitions and other strategic transactions. 

We incur substantial costs in connection with acquisitions and other strategic transactions, including transaction-related 

expenses. In addition, we may incur additional costs to maintain employee morale, retain key employees, and to formulate and execute 
integration plans. Although we expect that the elimination of duplicative costs, as well as the realization of other efficiencies related to 
the integration of acquired businesses, should allow us to more than offset incremental transaction and acquisition-related costs over 
time, this net benefit may not be achieved in the near term, or at all. 

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 future growth will partly depend on our ability to maintain our reputation for providing quality patient care and, through 

new programs and marketing activities, increased demand for our services. Factors such as increased acuity of our patients, health and 
safety incidents at our facilities, regulatory enforcement actions, negative press, civil liability or general customer dissatisfaction could 
lead to deterioration in the level of our quality ratings or the public perception of the quality of our services (including as a result of 
negative publicity about our industry generally), which in turn could lead to a loss of patient placements, referrals and self-pay patients 
or service users. Any impairment of our reputation, loss of goodwill or damage to the value of our brand name could have a material 
adverse effect on our business, results of operations and financial condition. 

Many of our service users have complex medical conditions or special needs, are vulnerable and often require a substantial level 

of care and supervision. Our service users have in the past been harmed by one or more of our employees, and could in the future be 
harmed by our employees, either intentionally, through negligence or by accident. Further, individuals cared for by us have in the past 
engaged, and may in the future engage, in behavior that results in harm to themselves, our employees or to one or more other 
individuals, including members of the public. A serious incident involving harm to one or more service users or other individuals 
could result in negative publicity. Such negative publicity could have a material adverse effect on our brand, reputation and ADC, 
which would have a corresponding negative impact on our business, results of operations and financial condition. 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. 

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. 

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. 

Our business could be disrupted if our information systems fail or if our databases are destroyed or damaged. 

Our information technology (“IT”) platforms support, among other things, management control of patient administration, 

billing and financial information and reporting processes. For example, patients in some of our facilities have an electronic patient 
record that allows our caregivers and nurses to see information about a patient’s care and treatment. Our IT systems are subject to 
damage or interruption from power outages, facility damage, computer and telecommunications failures, computer viruses, security 
breaches including credit card or personally identifiable information breaches, vandalism, theft, natural disasters, catastrophic events, 
human error and potential cyber threats, including malicious codes, worms, phishing attacks, denial of service attacks, ransomware 
and other sophisticated cyber-attacks, and our disaster recovery planning cannot account for all eventualities. Any failure in or breach 
of our IT systems could adversely impact our business, results of operations and financial condition. 

If we do not continually enhance our facilities with the most recent technological advances, our ability to maintain and expand our 
markets will be adversely affected. 

As healthcare technology continues to advance, we expect information technology to play a greater role in our marketing and 

admissions processes and the operation of our facilities. To compete effectively, we must continually assess our automation needs and 
upgrade when significant technological advances occur. If our facilities do not stay current with technological advances in the 
healthcare industry, patients may seek treatment from other providers and/or physicians may refer their patients to alternate sources, 
which could adversely affect our results of operations and harm our business. 

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. 

We have experienced adverse IT events in the past including a criminal ransomware attack on our computer network, which 
resulted in a temporary systems outage, as well as attempts of computer hacking, vandalism and theft, malware, computer viruses, 
malicious codes, worms, phishing and other cyber-attacks. To date, we have seen no material impact on our business or operations 
from these attacks or events. However, it is widely reported that healthcare companies are increasingly prime targets for cyber-attacks 
and we expect our systems to continue to be subject to attack on a regular basis. 

The proliferation of ever-evolving cyber threats mean that we and our third-party service providers and vendors must 

continually evaluate and adapt our respective systems and processes and overall security environment, as well as those of any 
operations we acquire. As cyber criminals continue to become more sophisticated through evolution of their tactics, techniques and 
procedures, we have taken, and will continue to take, additional preventive measures to strengthen the cyber defenses of our networks 
and data. There is no guarantee that these measures will be adequate to safeguard against all data security breaches, system 
compromises, or misuses of data.   

We may be required to expend significant capital and other resources to protect against the threat of security breaches or to 
alleviate problems caused by breaches, including unauthorized access to patient data and personally identifiable information stored in 
our IT systems, and the introduction of computer viruses or other malicious software programs to our systems, and cyber-attacks, 
email phishing schemes, malware, and ransomware. Moreover, a security breach, or threat thereof, could require that we expend 
significant resources to repair or improve our information systems and infrastructure and could distract management and other key 
personnel from performing their primary operational duties. In the event of a material breach or cyber-attack, the associated expenses 
and losses may exceed our current insurance coverage for such events. In addition, some adverse consequences are not insurable, such 
as reputational harm and third-party business interruption. 

A cyber-attack that bypasses our IT security systems, or other adverse IT event, resulting in an IT security breach, loss of PHI or 

other data subject to privacy laws, loss of proprietary business information, or a material disruption of our IT business systems, could 
have a material adverse impact on our business, financial condition or results of operations. 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. 

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. 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. Health and safety risks are inherent in the services that 
we provide and are constantly present in our facilities, primarily in respect of food and water quality, as well as fire safety and the risk 
that service users may cause harm to themselves, other service users or employees. From time to time, we have experienced, like other 
providers of similar services, undesirable health and safety incidents. Some of our activities are particularly exposed to significant 
medical risks relating to the transmission of infections or the prescription and administration of drugs for residents and patients. If any 
of the above medical or health and safety risks were to materialize, we may be held liable, fined and any registration certificate could 
be suspended or withdrawn for failure to comply with applicable regulations, which may have a material adverse impact on our 
business, results of operations and financial condition. 

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. 

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. 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. 

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. 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. Even if our facilities are not directly damaged, we may experience considerable disruptions in our 
operations due to property damage or electrical outages experienced in storm-affected areas by our personnel, payors, vendors and 
others. Additionally, long-term adverse weather conditions, whether caused by global climate change or otherwise, could cause an 
outmigration of people from the communities where our facilities are located. If any of the circumstances described above occur, our 
business, financial condition or results of 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, 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. Such a crisis could diminish the public trust in healthcare 
facilities, especially facilities with patients affected by infectious diseases. If any of our facilities were involved, or perceived as being 
involved, in treating such patients, other patients might fail to seek care at our facilities, and our reputation may be negatively affected. 
Further, a pandemic, epidemic or outbreak might adversely impact our business by causing a temporary shutdown or diversion of 
patients, by disrupting or delaying production and delivery of pharmaceuticals and other medical supplies or by causing staffing 
shortages in our facilities. 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. 

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. 

Our ability to grow or even to maintain our existing level of business depends significantly on our ability to establish and 

maintain close working relationships with physicians, managed care companies, insurance companies, educational consultants and 
other referral sources. We may not be able to maintain our existing referral source relationships or develop and maintain new 
relationships in existing or new markets. If we lose existing relationships with our referral sources, the number of people to whom we 
provide services may decline, which may adversely affect our revenue. If we fail to develop new referral relationships, our growth 
may be restrained. 

We operate in a highly competitive industry, and competition may lead to declines in patient volumes. 

The healthcare industry is highly competitive, and competition among healthcare providers (including hospitals) for patients, 

physicians and other healthcare professionals has intensified in recent years. There are other healthcare facilities that provide 
behavioral and other mental health services comparable to those offered by our facilities in each of the geographical areas in which we 
operate. Some of our competitors are owned by tax-supported governmental agencies or by non-profit corporations and may have 
certain financial advantages not available to us, including endowments, charitable contributions, tax-exempt financing and exemptions 
from sales, property and income taxes. 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. We also face competition from other for-profit entities, 
who may possess greater financial, marketing or research and development resources than us or may invest more funds in renovating 
their facilities or developing technology. 

If our competitors are better able to attract patients, recruit and retain physicians and other healthcare professionals, expand 
services or obtain favorable managed care contracts at their facilities, we may experience a decline in patient volume and our results of 
operations may be adversely affected. 

We may be unable to extend leases at expiration, which could harm our business, financial condition or results of operations. 

We lease the real property on which a number of our facilities are located. Our lease agreements generally give us the right to 
renew or extend the term of the leases and, in certain cases, purchase the real property. These renewal and purchase rights generally 
are based upon either prescribed formulas or fair market value. Management expects to renew, extend or exercise purchase options 
with respect to our leases in the normal course of business; however, there can be no assurance that these rights will be exercised in 
the future or that we will be able to satisfy the conditions precedent to exercising any such renewal, extension or purchase options. 
Furthermore, the terms of any such options that are based on fair market value are inherently uncertain and could be unacceptable or 
unfavorable to us depending on the circumstances at the time of exercise. If we are not able to renew or extend our existing leases, or 
purchase the real property subject to such leases, at or prior to the end of the existing lease terms, or if the terms of such options are 
unfavorable or unacceptable to us, our business, financial condition or results of operations could be adversely affected.  

Controls designed to reduce inpatient services may reduce our revenue. 

Controls imposed by Medicare, Medicaid and commercial third-party payors designed to reduce admissions and lengths of stay, 

commonly referred to as “utilization review,” have affected and are expected to continue to affect our facilities. Inpatient utilization, 
average lengths of stay and occupancy rates continue to be negatively affected by payor-required preadmission authorization and 
utilization review and by payor pressure to maximize outpatient and alternative healthcare delivery services for less acutely ill 
patients. Efforts to impose more stringent cost controls are expected to continue. For example, the Patient Protection and Affordable 
Care Act, as amended by the Health Care and Education Reconciliation Act of 2010, expanded the potential use of prepayment review 
by Medicare contractors by eliminating certain statutory restrictions on its use. Utilization review is also a requirement of most non-
governmental managed-care organizations and other third-party payors. Although we are unable to predict the effect these controls 
and changes will have on our operations, significant limits on the scope of services reimbursed and on reimbursement rates and fees 
could have a material adverse effect on our financial condition and 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 operations depend on the efforts, abilities and experience of our management and medical support personnel, including our 
addiction counselors, therapists, nurses, pharmacists, licensed counselors, clinical technicians, and mental health technicians, as well 
as our psychiatrists and other professionals. We compete with other healthcare providers in recruiting and retaining qualified 
management, program directors, physicians (including psychiatrists) and support personnel responsible for the daily operations of our 
business, financial condition or results of operations. 

A shortage of nurses, qualified addiction counselors and other medical and care support personnel, combined with low 

unemployment rates for such personnel and intense competition from other healthcare facilities, has been a significant operating issue 
facing us and other healthcare providers. We may be required to enhance wages and benefits to hire nurses, qualified addiction 
counselors and other medical and care support personnel, hire more expensive temporary personnel or increase our recruiting and 
marketing costs relating to labor. We have resorted to using more expensive contract labor at certain of our facilities, and the use of 
temporary or agency staff could heighten the risk one of our facilities experiences an adverse patient incident. Further, because we 
generally recruit our personnel from the local area where the relevant facility is located, the availability in certain areas of suitably 
qualified personnel can be limited, particularly care home management, qualified teaching personnel and nurses. In addition, certain of 
our facilities are required to maintain specified staffing levels. To the extent we cannot meet those levels, we may be required to limit 
the services provided by these facilities, which would have a corresponding adverse effect on our net operating revenue. Certain of our 
treatment facilities are located in remote geographical areas, far from population centers, which increases this risk. 

We cannot predict the degree to which we will be affected by the future availability or cost of attracting and retaining talented 

medical support staff. If our general labor and related expenses increase, we may not be able to raise our rates correspondingly. 
Increased turnover rates within our employee base can lead to decreased efficiency and increased costs, such as increased overtime 
and use of contract labor to meet demand and increased wage rates to attract and retain employees. 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. 

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. Although we 
employ psychiatrists and other physicians at many of our facilities, psychiatrists and other physicians generally are not employees of 
our facilities, and, in a number of our markets, they have admitting privileges at competing hospitals providing acute or inpatient 
behavioral healthcare services. Such physicians (including psychiatrists) may terminate their affiliation with us at any time or admit 
their patients to competing healthcare facilities or hospitals. If we are unable to attract and retain sufficient numbers of quality 
psychiatrists and other physicians by providing adequate support personnel and facilities that meet the needs of those psychiatrists and 
other physicians, they may stop referring patients to our facilities and our results of operations may decline. 

It may become difficult for us to attract and retain an adequate number of psychiatrists and other physicians to practice in certain 
of the communities in which our facilities are located. Our failure to recruit psychiatrists and other physicians to these communities or 
the loss of such medical professionals in these communities could make it more difficult to attract patients to our facilities and thereby 
may have a material adverse effect on our business, financial condition or results of operations. Additionally, our ability to recruit 
psychiatrists and other physicians is closely regulated. The form, amount and duration of assistance we can provide to recruited 
psychiatrists and other physicians is limited by the Stark Law, the Anti-Kickback Statute, state anti-kickback statutes, and related 
regulations. 

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. 
Furthermore, there is a possibility that work stoppages could occur as a result of union activity, which could increase our labor costs 
and adversely affect our business, financial condition or results of operations. 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. 

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. 

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. It may take 
time for new officers to be integrated into our business. In addition, the loss of the services of one or more of our senior executives or 
our facility management personnel could significantly undermine our management expertise and our ability to provide efficient, 
quality healthcare services at our facilities, which could have a material adverse effect on our business, results of operations and 
financial condition.  

Legal Proceedings and Regulatory Risks 

We are and in the future could become the subject of additional governmental investigations, regulatory actions and whistleblower 
lawsuits. 

Healthcare companies in the U.S. may be subject to investigations by various governmental agencies. 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. 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. 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. If we incur significant costs responding to or resolving 
these or future inquiries or investigations, our business, financial condition and results of operations could be materially adversely 
affected. 

Further, under the False Claims Act, private parties are permitted to bring qui tam or “whistleblower” lawsuits against 

companies that submit false claims for payments to, or improperly retain overpayments from, the government. Because qui tam 
lawsuits are filed under seal, we could be named in one or more such lawsuits of which we are not aware. 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. 

During the second quarter of 2019, we reached a settlement with the U.S. Attorney’s Office for the Southern District of West 
Virginia relating to the manner in which seven of our CTCs in West Virginia had historically billed lab claims to the West Virginia 
Medicaid Program. During the three months ended June 30, 2019, we entered into the CIA with the OIG imposing certain compliance 
obligations on us and our subsidiary, CRC Health, LLC, in connection with such settlement. Material, uncorrected violations of the 
CIA could lead to our suspension or exclusion from participation in Medicare, Medicaid and other federal and state healthcare 
programs and repayment obligations. In addition, we are subject to possible civil penalties for failure to substantially comply with the 
terms of the CIA, including stipulated penalties ranging between $1,000 to $2,500 per day. We are also subject to a stipulated penalty 
of $50,000 for each false certification made by us or on our behalf, pursuant to the reporting provisions of the CIA. The CIA increases 
the amount of information we must provide to the federal government regarding our healthcare practices and our compliance with 
federal regulations. The reports we provide in connection with the CIA could result in greater scrutiny by regulatory authorities. 

Even if we successfully comply with all terms of the existing CIA, we may be subject to similar agreements in the future if we 

are found to have violated laws against healthcare fraud, waste, and abuse. 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 have been in the past and will continue in the future to be subject to complaints and claims from service users and their 

family members alleging professional negligence, medical malpractice or mistreatment. We are also subject to claims for unlawful 
detention from time to time when patients allege they should not have been detained under applicable laws and regulations or where 
the appropriate procedures were not correctly followed. Similarly, we have been in the past and will continue in the future to be 
subject to substantial claims from employees in respect of personal injuries sustained in the performance of their duties. Current or 
former employees may also make claims against us in relation to breaches of employment laws. There may also be safeguarding 
incidents at our facilities which, depending on the circumstances, may result in custodial sentences or other criminal sanctions for the 
member of staff involved. 

For example, as described in more detail in Note 11 – Commitments and Contingencies in the accompanying notes to our 
consolidated financial statements, on July 7, 2023, in connection with one of the lawsuits in our Desert Hills Litigation, a jury awarded 
the plaintiff compensatory damages of $80.0 million and punitive damages of $405.0 million. We subsequently 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 this lawsuit, as well as two other related cases. An additional lawsuit based on similar facts has been filed and we could incur 
substantial damage awards or settlements in connection with this lawsuit or any future claims.  

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. 

We carry a large self-insured retention and may be responsible for significant amounts not covered by insurance. 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. 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. Due to the structure 
of our insurance program under which we carry a large self-insured retention, there may be substantial claims in respect of which the 
liability for damages and costs falls to us before being met by any insurance underwriter. As was the case with the Desert Hills 
Litigation, there may also be claims in excess of our insurance coverage or claims which are not covered by our insurance due to other 
policy limitations or exclusions or where we have failed to comply with the terms of the policy. Furthermore, there can be no 
assurance that we will be able to obtain liability insurance coverage in the future on acceptable terms, or without substantial premium 
increases or at all, particularly if there is a deterioration in our claim experience history. A successful claim against us not covered by 
or in excess of our insurance coverage could have a material adverse effect on our business, results of operations and financial 
condition. 

We handle sensitive personal data which are protected by numerous U.S. laws in the ordinary course of business and any failure to 
maintain the confidentiality of such data could result in legal liability and reputational harm. 

We collect, process and store sensitive personal data as part of our business. 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. Although we have in place policies and procedures to prevent such breaches, 
breaches could occur either as a result of a breach by our employees or as a result of a breach by a third-party to whom we have 
provided sensitive personal data. We could face liability under data protection laws. 

Liability under data protection laws may result in sanctions, including substantial fines and/or compensation to those affected. 
Additionally, liability may cause us to suffer damage to our brand and reputation, which could have a material adverse effect on our 
business, results of operations and financial condition. 

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. 

Companies operating in the behavioral healthcare industry in the U.S. are required to comply with extensive and complex laws 

and regulations at the federal, state and local government levels relating to, among other things: billing practices and prices for 
services; relationships with physicians and other referral sources; necessity and quality of medical care; condition and adequacy of 
facilities; qualifications of medical and support personnel; confidentiality, privacy and security issues associated with health-related 
information and PHI; EMTALA compliance; handling of controlled substances; certification, licensure and accreditation of our 
facilities; operating policies and procedures; activities regarding competitors; state and local land use and zoning requirements; and 
addition or expansion of facilities and services. 

Among the laws applicable to our operations are the federal Anti-Kickback Statute, the Stark Law, the federal False Claims Act, 

EKRA, and similar state laws. These laws impact the relationships that we may have with physicians and other potential referral 
sources. We have a variety of financial relationships with physicians and other professionals who refer patients to our facilities, 
including employment contracts, leases and professional service agreements. The OIG has issued certain safe harbor regulations that 
outline practices that are deemed acceptable under the Anti-Kickback Statute, and similar regulatory exceptions have been 
promulgated by CMS under the Stark Law. While we endeavor to ensure that our arrangements with referral sources comply with an 
applicable safe harbor to the Anti-Kickback Statute where possible, certain of our current arrangements with physicians and other 
potential referral sources may not qualify for such protection. 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. Moreover, 
while we believe that our arrangements with physicians comply with applicable Stark Law exceptions, the Stark Law is a strict 
liability statute for which no intent to violate the law is required. 

Effective January 1, 2022, the No Surprises Act, enacted as part of the Consolidated Appropriations Act (the “CAA”), creates 
price transparency requirements, including (i) requiring providers to send to patients or their health plan a good faith estimate of the 
expected charges and diagnostic codes prior to furnishing scheduled items or services and (ii) prohibiting providers from charging 
patients an amount beyond the in-network cost sharing amount for services rendered by out-of-network providers, subject to limited 
exceptions. 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. In the future, it is possible that different interpretations of these laws and regulations could subject our current or past 
practices to allegations of impropriety or illegality or could require us to make changes in our arrangements for facilities, equipment, 
personnel, services, capital expenditure programs and operating expenses. A determination that we have violated one or more of these 
laws could subject us to liabilities, including civil penalties, exclusion of one or more facilities from participation in the government 
healthcare programs and, for violations of certain laws and regulations, criminal penalties. Even the public announcement that we are 
being investigated for possible violations of these laws could cause our reputation to suffer and have a material adverse effect on our 
business, financial condition or results of operations. In addition, we cannot predict whether other similar legislation or regulations at 
the federal or state level will be adopted, what form such legislation or regulations may take or what their impact on us may be. 

The construction and operation of healthcare facilities in the U.S. are subject to extensive federal, state and local regulation 

relating to, among other things, the adequacy of medical care, equipment, personnel, operating policies and procedures, fire 
prevention, rate-setting, compliance with building codes and environmental protection. Additionally, such facilities are subject to 
periodic inspection by government authorities to assure their continued compliance with these various standards. If we fail to adhere to 
these standards, we could be subject to monetary penalties or restrictions on our ability to operate. 

All of our facilities that handle and dispense controlled substances must comply with strict federal and state regulations 
regarding the purchase, storage, distribution and disposal of such controlled substances. The potential for theft or diversion of such 
controlled substances for illegal uses has led the federal government as well as a number of states and localities to adopt stringent 
regulations not applicable to many other types of healthcare providers. Compliance with these regulations is expensive and these costs 
may increase in the future. 

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. If any of 
these attempts were to succeed or if their frequency were to increase, our revenue would be adversely affected and our operating 
results might be harmed. In addition, such actions may require us to litigate which would increase our costs. 

Many of our facilities are also accredited by third-party accreditation agencies such as The Joint Commission or CARF. If any 

of our existing healthcare facilities lose their accreditation or any of our de novo or joint venture facilities fail to receive accreditation, 
such facilities could become ineligible to receive reimbursement under Medicare or Medicaid. 

Federal, state and local regulations determine the capacity at which many of our facilities may be operated. State licensing 
standards require many of our facilities to have minimum staffing levels; minimum amounts of residential space per student or patient 
and adhere to other minimum standards. Local regulations require us to follow land use guidelines at many of our facilities, including 
those pertaining to fire safety, sewer capacity and other physical plant matters. 

Our facilities have in the past and will continue in the future to be subject to regular surveys by federal, state, and local 
regulators, accreditation agencies and certain referral sources. Such surveys have in the past and could in the future result in findings 
of immediate jeopardy, licensing restrictions and admissions holds. Such survey activity could in the future result in loss of 
certification, loss of accreditation, admissions holds and license revocation, which could have a material adverse effect on our 
business, financial condition or results of operations.   

We cannot guarantee that current laws, regulations and regulatory assessment methodologies will not be modified or replaced in 
the future. There can be no assurance that our business, results of operations and financial condition will not be adversely affected by 
any future regulatory developments or that the cost of compliance with new regulations will not be material. 

We may be required to spend substantial amounts to comply with statutes and regulations relating to privacy and security of PHI. 

There are currently numerous legislative and regulatory initiatives in the U.S. addressing patient privacy and information 
security concerns. In particular, federal regulations issued under HIPAA require our facilities to comply with standards to protect the 
privacy, security and integrity of PHI. These requirements include: the adoption of certain administrative, physical, and technical 
safeguards; development of adequate policies and procedures, training programs and other initiatives to ensure the privacy of PHI is 
maintained; entry into appropriate agreements with so-called business associates; and affording patients certain rights with respect to 
their PHI, including notification of any breaches. Compliance with these regulations requires substantial expenditures, which could 
negatively impact our business, financial condition or results of operations. In addition, our management has spent, and may spend in 
the future, substantial time and effort on compliance measures. 

In addition to HIPAA, we are subject to similar, and in some cases more restrictive, state and federal privacy regulations. For 
example, the federal government and some states impose laws governing the use and disclosure of health information pertaining to 
mental health and/or substance abuse treatment that are more stringent than the rules that apply to healthcare information generally. 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. 

Violations of the privacy and security regulations could subject our operations to substantial civil monetary penalties and 
substantial other costs and penalties associated with a breach of data security, including criminal penalties. We may also be subject to 
substantial reputational harm if we experience a substantial security breach involving PHI. 

We could face risks associated with, or arising out of changing laws and regulations, including those involving environmental, 
health and safety laws and regulations. 

We are subject to various federal, foreign, state and local laws and regulations that: 

 

 

 

regulate certain activities and operations that may have environmental or health and safety effects, such as the generation, 
handling and disposal of medical wastes; 

impose liability for costs of cleaning up, and damages to natural resources from, past spills, waste disposals on and off-
site, or other releases of hazardous materials or regulated substances; and 

regulate workplace safety. 

Compliance with these laws and regulations could increase our costs of operation. Violation of these laws may subject us to 
significant fines, penalties or disposal costs, which could negatively impact our results of operations, financial condition or cash flows. 
We could be responsible for the investigation and remediation of environmental conditions at currently or formerly owned, operated 
or leased sites, as well as for associated liabilities, including liabilities for natural resource damages, third-party property damage or 
personal injury resulting from lawsuits that could be brought by the government or private litigants, relating to our operations, the 
operations of facilities or the land on which our facilities are located. We may be subject to these liabilities regardless of whether we 
operate, lease or own the facility, and regardless of whether such environmental conditions were created by us or by a prior owner or 
tenant, or by a third-party or a neighboring facility whose operations may have affected such facility or land. 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. We cannot assure you that environmental conditions relating to our prior, existing or future sites or those of 
predecessor companies whose liabilities we may have assumed or acquired will not have a material adverse effect on our business, 
financial condition or results of operations. 

State efforts to regulate the construction or expansion of healthcare facilities could impair our ability to operate and expand our 
operations. 

A majority of the states in which we operate facilities have enacted CON laws that regulate the construction or expansion of 
healthcare facilities, certain capital expenditures or changes in services or bed capacity. In giving approval for these actions, these 
states consider the need for additional or expanded healthcare facilities or services. Our failure to obtain necessary state approval 
could (i) result in our inability to acquire a targeted facility, complete a desired expansion or make a desired replacement, (ii) make a 
facility ineligible to receive reimbursement under the Medicare or Medicaid programs or (iii) result in the revocation of a facility’s 
license or imposition of civil or criminal penalties, any of which could harm our business. 

In addition, significant CON reforms have been proposed in a number of states that would increase the capital spending 
thresholds and provide exemptions of various services from review requirements. In the past, we have not experienced any material 
adverse effects from such requirements, but we cannot predict the impact of these changes upon our operations. 

We are required to treat patients with emergency medical conditions regardless of ability to pay. 

In accordance with our internal policies and procedures, as well as EMTALA, we provide a medical screening examination to 
any individual who comes to one of our hospitals seeking medical treatment (whether or not such individual is eligible for insurance 
benefits and regardless of ability to pay) to determine if such individual has an emergency medical condition. If it is determined that 
such person has an emergency medical condition, we provide such further medical examination and treatment as is required to 
stabilize the patient’s medical condition, within the facility’s capability, or arrange for the transfer of the individual to another medical 
facility in accordance with applicable law and the treating hospital’s written procedures. Our hospitals may face substantial civil 
penalties if we fail to provide appropriate screening and stabilizing treatment or fail to facilitate other appropriate transfers as required 
by EMTALA. 

We are subject to taxation in the U.S., Puerto Rico and various state jurisdictions. Any adverse development in the tax laws of such 
jurisdictions or any disagreement with our tax positions could have a material adverse effect on our business, financial condition 
or results of operations. In addition, our effective tax rate could change materially as a result of changes in tax laws. 

We are subject to taxation in, and to the tax laws and regulations of, the U.S., Puerto Rico and various state jurisdictions as a 

result of our operations and our corporate and financing structure. 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. In addition, the tax authorities in any applicable 
jurisdiction may disagree with the tax treatment or characterization of any of our transactions, which, if successfully challenged by 
such tax authorities, could have a material adverse effect on our business, financial condition or results of operations. 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.  

General Risk Factors 

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

Provisions of our amended and restated certificate of incorporation and amended and restated bylaws may discourage, delay or 

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

 

 

 

 

 

a classified board of directors; 

a prohibition on stockholder action through written consent; 

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

advance notice requirements for stockholder proposals and nominations; and 

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

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. Although we have elected not 
to be subject to Section 203 of the DGCL, our amended and restated certificate of incorporation contains provisions that have the same 
effect as Section 203, except that they provide that Waud Capital Partners, L.L.C. (“WCP”), its affiliates and any investment fund 
managed by WCP will be deemed to have been approved by our board of directors, and thereby not subject to the restrictions set forth 
in our amended and restated certificate of incorporation that have the same effect as Section 203 of the DGCL. Accordingly, the 
provision in our amended and restated certificate of incorporation that adopts a modified version of Section 203 of the DGCL may 
discourage, delay or prevent a change in control of us. 

As a result of these provisions in our charter documents and Delaware law, the price investors may be willing to pay in the 

future for shares of our common stock may be limited. 

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. 

The stock markets experience volatility, in some cases unrelated to operating performance. These broad market fluctuations may 

adversely affect the trading price of our common stock and, as a result, there may be significant volatility in the market price of our 
common stock. If we are unable to operate our facilities as profitably as we have in the past or as our investors expect us to in the 
future, the market price of our common stock will likely decline when it becomes apparent that the market expectations may not be 
realized. In addition to our operating results, many economic and other factors outside of our control could have an adverse effect on 
the price of our common stock and increase fluctuations in our quarterly earnings. These factors include certain of the risks discussed 
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. 

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. These sales 
might also make it more difficult for us to sell equity securities at a time and price that we deem appropriate.  

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

The trading market for our common stock will be influenced by the research and reports that industry or securities analysts 

publish about us. If one or more of these analysts cease coverage of us or fail to publish regular reports on us, we could lose visibility 
in the financial markets, which in turn could cause our stock price or trading volume to decline. Moreover, if one or more of the 
analysts who cover us downgrade our stock or if our operating results do not meet their expectations, our stock price could decline. 

We incur substantial costs as a result of being a public company. 

As a public company, we incur significant legal, accounting, insurance and other expenses, including costs associated with 

public company reporting requirements. We incur costs associated with complying with the requirements of the Sarbanes-Oxley Act, 
the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), and related rules implemented by the SEC 
and NASDAQ. Enacted in July 2010, the Dodd-Frank Act contains significant corporate governance and executive compensation-
related provisions, some of which the SEC has implemented by adopting additional rules and regulations in areas such as executive 
compensation. The expenses incurred by public companies generally for reporting and corporate governance purposes have been 
increasing. Management expects these laws and regulations to increase our legal and financial compliance costs and to make some 
activities more time-consuming and costly, although management is currently unable to estimate these costs with any degree of 
certainty. These laws and regulations could make it more difficult or costly for us to obtain certain types of insurance, including 
director and officer liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially 
higher costs to obtain the same or similar coverage. These laws and regulations could also make it more difficult for us to attract and 
retain qualified persons to serve on our board of directors, our board committees or as our executive officers. 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. Unresolved Staff Comments. 

None. 

Item 1C. Cybersecurity. 

As part of our Enterprise Risk Management (“ERM”) process, we identify risks and assign responsibility for managing each 
risk to the appropriate level of management. Cybersecurity is a risk identified in our ERM process. Management has implemented a 
comprehensive cybersecurity risk management strategy in line with industry standards and regulatory requirements. This strategy 
includes:  

 

 

 

 

conducting an independent cybersecurity maturity assessment to evaluate the health of our overall cyber programs and 
developing a solid roadmap to continuously improve our defensive posture; 

performing regular risk assessments, where we identify potential vulnerabilities and evaluate the likelihood of various 
cyber threats; 

implementing security controls including email and browser protection, audit log monitoring, malware defenses, 
controlled use of administrative privileges, encryption protocols, and multi-factor authentication; and 

implementing progressively challenging employee training and awareness programs, including simulated phishing 
campaigns, to reduce the risk of human error in the recognition and reporting of potential threats.  

We continuously monitor our networks and systems and integrate threat intelligence feeds to evaluate evolving cyber threats. 
We conduct regular testing and simulation exercises, including engaging third-party service providers to perform penetration testing, 
to identify and address weaknesses in our defenses and engage third-party service providers to perform cybersecurity risk assessments, 
which are based on the National Institute of Standards and Technology framework. Cyber risks are considered and addressed for those 
third-party relationships deemed critical to our operations, as well as those with access to or custody of confidential data or customer 
non-public information, including PHI, and those services or products accessed in a cloud environment or involving generative 
artificial intelligence or other machine learning technologies.  

The 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. Our CIO has 15 years of 
experience in cybersecurity and a degree in management information systems. We also have a Cybersecurity Infrastructure Committee 
that meets monthly. We have implemented an incident response strategy as an element of our overall risk management approach. Our 
incident response plan entails clearly-defined roles and responsibilities, established communication protocols and measures to mitigate 
the impact of any cybersecurity incidents. We have experienced adverse IT events in the past, but to date, we have seen no material 
impact on our business or operations from these attacks or events. We prioritize the detection, response, and recovery from potential 
breaches and carry cybersecurity insurance which includes cyber breach response services. The scope and coverage of our 
cybersecurity insurance is reviewed on an annual basis. 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 

 
 
Item 2. Properties. 

The 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 
Alaska 
Arizona 
Arkansas 
California 
Delaware 
Florida 
Georgia 
Illinois 
Indiana 
Iowa 
Kansas 
Kentucky 
Louisiana 
Maine 
Maryland 
Massachusetts 
Michigan 
Mississippi 
Missouri 
Nevada 
New Hampshire 
New Jersey 
North Carolina 
Ohio 
Oklahoma 
Oregon 
Pennsylvania 
Rhode Island 
South Carolina 
South Dakota 
Tennessee 
Texas 
Utah 
Vermont 
Virginia 
Washington 
West Virginia 
Wisconsin 
Puerto Rico 

Facilities 

   Operated Beds 

1     
4     
6     
22     
4     
13     
9     
3     
10     
2     
1     
1     
6     
6     
3     
14     
5     
3     
6     
3     
2     
1     
10     
6     
4     
7     
31     
2     
1     
1     
14     
5     
6     
1     
9     
8     
7     
15     
1     
253     

— 
533 
785 
486 
130 
509 
390 
353 
337 
— 
— 
— 
467 
— 
— 
263 
442 
496 
580 
134 
— 
— 
376 
290 
108 
— 
1,836 
— 
63 
126 
1,049 
607 
147 
— 
474 
— 
— 
35 
172 
11,188 

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. 

Item 3. Legal Proceedings. 

Information with respect to this item may be found in 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, which information is 
incorporated herein by reference.  

Item 4. Mine Safety Disclosures 

Not applicable. 

33 

 
 
 
 
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
 
   
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.  

Our common stock is listed for trading on The NASDAQ Global Select Market under the symbol “ACHC.”  

PART II 

Stockholders 

As of February 28, 2024, there were approximately 598 holders of record of our common stock. 

Recent Sales of Unregistered Securities 

None. 

Issuer 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 
October 1 – October 31 
November 1 – November 30 
December 1 – December 31 
Total 

Dividends 

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 

Total Number 
of Shares 
Purchased 

Average Price
Paid per 
Share 

3,709    $ 
2,306    $ 
730    $ 

6,745   

74.54     
73.18     
74.96     

—      
—      
—      

— 
— 
— 

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

Item 6. [Reserved] 

34 

 
 
 
  
  
  
 
   
   
   
   
 
 
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 

You should read the following discussion and analysis of our financial condition and results of operations with our audited 

consolidated financial statements and notes thereto included elsewhere in this Annual Report on Form 10-K. 

Cautionary Note Regarding Forward-Looking Statements 

This Annual Report on Form 10-K contains “forward-looking statements” within the meaning of the Private Securities 

Litigation Reform Act of 1995. Forward-looking statements include any statements that address future results or occurrences. In some 
cases you can identify forward-looking statements by terminology such as “may,” “might,” “will,” “would,” “should,” “could” or the 
negative thereof. 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. While we 

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

Given these risks and uncertainties, you are cautioned not to place undue reliance on such forward-looking statements. These 

risks and uncertainties may cause our actual future results to be materially different than those expressed in our forward-looking 
statements. These forward-looking statements are made only as of the date of this Annual Report on Form 10-K. We do not undertake 
and specifically decline any obligation to update any such statements or to publicly announce the results of any revisions to any such 
statements to reflect future events or developments. 

Overview 

Our business strategy is to become the indispensable behavioral healthcare provider for the high-acuity and complex needs 

patient population. We are committed to providing the communities we serve with high-quality, cost-effective behavioral healthcare 
services, while growing our business, increasing profitability and creating long-term value for our stockholders. This strategy includes 
five growth pathways: expansions of existing facilities, joint venture partnerships, de novo facilities, acquisitions and expansion across 
our continuum of care. At 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. For the 
year ending December 31, 2024, we expect to add approximately 1,200 total beds and open up to 14 CTCs, excluding acquisitions. 

We are the leading publicly traded pure-play provider of behavioral healthcare services in the U.S. Management believes that 
we are positioned as a leading platform in a highly fragmented industry under the direction of an experienced management team that 
has significant industry expertise. Management expects to take advantage of several strategies that are more accessible as a result of 
our increased size and geographic scale, including continuing a national marketing strategy to attract new patients and referral sources, 
increasing our volume of out-of-state referrals, providing a broader range of services to new and existing patients and clients and 
selectively pursuing opportunities to expand our facility and bed count in the U.S. through acquisitions, wholly-owned de novo 
facilities, joint ventures and bed additions in existing facilities. 

On January 19, 2021, we completed the U.K. Sale pursuant to a Share Purchase Agreement in which we sold all of the securities 

of AHC-WW Jersey Limited, a private limited liability company incorporated in Jersey and a subsidiary of the Company, which 
constituted the entirety of our U.K. operations. As a result of the U.K. Sale, we reported, for all periods presented, results of operations 
and cash flows of the U.K. operations as discontinued operations in the accompanying financial statements. 

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. The transaction closed on February 22, 2024. 

On November 7, 2022, we acquired four CTCs located in Georgia from Brand New Start. 

On December 31, 2021, we acquired the equity of 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. At the time of the 
acquisition, CenterPointe operated four acute inpatient hospitals with 306 beds and ten outpatient locations primarily in Missouri. 

Results of Operations 

The following table illustrates our consolidated results of operations for the respective periods shown (dollars in thousands): 

2023 

Year Ended December 31, 
2022 

2021 

Revenue 
Salaries, wages and benefits 
Professional fees 
Supplies 
Rents and leases 
Other operating expenses 
Income from provider relief fund 
Depreciation and amortization 
Interest expense, net 
Debt extinguishment costs 
Legal settlements expense 
Loss on impairment 
Gain on sale of property 
Transaction, legal and other costs 
      Total expenses 
(Loss) income from continuing operations 
before income taxes 
(Benefit from) provision for income taxes 
(Loss) income from continuing operations     
Loss from discontinued operations, net of 
taxes 
Net (loss) income 
Net income attributable to noncontrolling 
interests 
Net (loss) income attributable to Acadia 
Healthcare Company, Inc. 

  $ 

Amount 
  $  2,928,738     
    1,572,330     
176,013     
105,992     
46,552     
388,906     
(6,419)    
132,349     
82,125     
—     
394,181     
9,790     
(9,747)    
62,026     
    2,954,098     

Amount 

% 
100.0%   $  2,610,399     
53.7%     1,393,434     
158,013     
100,200     
45,462     
349,277     
(21,451)    
117,769     
69,760     
—     
—     
—     
—     
23,792     
100.9%     2,236,256     

6.0%    
3.6%    
1.6%    
13.3%    
(0.2)%    
4.5%    
2.8%    
0.0%    
13.5%    
0.3%    
(0.3)%    
2.1%    

Amount 

% 
100.0%   $  2,314,394      
53.4%     1,243,804      
136,739      
90,702      
38,519      
301,339      
(17,900 )    
106,717      
76,993      
24,650      
—      
24,293      
—      
12,778      
85.7%     2,038,634      

6.1%    
3.8%    
1.7%    
13.4%    
(0.8)%    
4.5%    
2.7%    
0.0%    
0.0%    
0.0%    
0.0%    
0.9%    

(25,360)    
(9,699)    
(15,661)    

(0.9)%    
(0.3)%    
(0.6)%    

374,143     
94,110     
280,033     

14.3%    
3.6%    
10.7%    

275,760      
67,557      
208,203      

—     
(15,661)    

0.0%    
(0.6)%    

—     
280,033     

0.0%    
10.7%    

(12,641 )    
195,562      

% 
100.0% 
53.7% 
5.9% 
3.9% 
1.7% 
13.0% 
(0.8)% 
4.6% 
3.3% 
1.1% 
0.0% 
1.0% 
0.0% 
0.6% 
88.0% 

12.0% 
2.9% 
8.9% 

(0.5)% 
8.4% 

(6,006)    

(0.2)%    

(6,894)    

(0.3)%    

(4,927 )    

(0.2)% 

(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. 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. We remain focused on ensuring that we have the level of staff to meet the demand in 
our markets across 38 states and Puerto Rico. 

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: 

Same Facility Results (a) 

Revenue growth 
Patient days growth 
Admissions growth 
Average length of stay change (b) 
Revenue per patient day growth 
Adjusted EBITDA margin change (c) 
Adjusted EBITDA margin excluding income 
    from provider relief fund (d) 

Year Ended December 31, 

2023 

12.0% 
5.1% 
4.9% 
0.2% 
6.5% 
60 bps 

120 bps 

2022 

9.2% 
2.5% 
(1.0)% 
3.6% 
6.5% 
70 bps 

60 bps 

(a)  Results for the periods presented include facilities we have operated more than one year and exclude certain closed 

services. 

(b)  Average length of stay is defined as patient days divided by admissions.  
(c)  Adjusted EBITDA is defined as income before provision for income taxes, equity-based compensation expense, debt 
extinguishment costs, loss on impairment, gain on sale of property, transaction, legal and other costs, interest expense, 
legal settlements expense and depreciation and amortization. Management uses Adjusted EBITDA as an analytical 
indicator to measure performance and to develop strategic objectives and operating plans. Adjusted EBITDA is 
commonly used as an analytical indicator within the healthcare industry, and also serves as a measure of leverage 
capacity and debt service ability. Adjusted EBITDA should not be considered as a measure of financial performance 
under GAAP, and the items excluded from Adjusted EBITDA are significant components in understanding and 
assessing financial performance. Because Adjusted EBITDA is not a measurement determined in accordance with 
GAAP and is thus susceptible to varying calculations, Adjusted EBITDA, as presented, may not be comparable to other 
similarly titled measures of other companies. Adjusted EBITDA margin is defined as Adjusted EBITDA divided by 
revenue.  

(d)  For the years ended December 31, 2023, 2022 and 2021, excludes income from provider relief fund of $6.4 million, 

$21.5 million and $17.9 million, respectively. 

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. 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%. Consistent with the 
same facility patient day growth in 2022, the growth in same facility patient days for the year ended December 31, 2023 compared to 
the year ended December 31, 2022 resulted from the addition of beds to our existing facilities and ongoing demand for our services.  

Salaries, wages and benefits. 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. Excluding equity-based compensation expense, SWB expense was $1,540.0 million, or 52.6% of revenue, for the year 
ended December 31, 2023, compared to $1,363.8 million, or 52.2% of revenue, for the year ended December 31, 2022. Same facility 
SWB expense was $1,396.1 million for the year ended December 31, 2023, or 48.2% of revenue, compared to $1,253.3 million for the 
year ended December 31, 2022, or 48.4% of revenue. 

Professional fees. Professional fees were $176.0 million for the year ended December 31, 2023, or 6.0% of revenue, compared 
to $158.0 million for the year ended December 31, 2022, or 6.1% of revenue. 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. Supplies expense was $106.0 million for the year ended December 31, 2023, or 3.6% of revenue, compared to $100.2 

million for the year ended December 31, 2022, or 3.8% of revenue. Same facility supplies expense was $104.0 million for the year 
ended December 31, 2023, or 3.6% of revenue, compared to $99.0 million for the year ended December 31, 2022, or 3.8% of revenue. 

Rents and leases. Rents and leases were $46.6 million for the year ended December 31, 2023, or 1.6% of revenue, compared to 

$45.5 million for the year ended December 31, 2022, or 1.7% of revenue. Same facility rents and leases were $42.5 million for the 
year ended December 31, 2023, or 1.5% of revenue, compared to $42.1 million for the year ended December 31, 2022, or 1.6% of 
revenue. 

Other operating expenses. Other operating expenses consisted primarily of purchased services, utilities, insurance, travel and 

repairs and maintenance expenses. Other operating expenses were $388.9 million for the year ended December 31, 2023, or 13.3% of 
revenue, compared to $349.3 million for the year ended December 31, 2022, or 13.4% of revenue. Same facility other operating 
expenses were $362.6 million for the year ended December 31, 2023, or 12.5% of revenue, compared to $331.7 million for the year 
ended December 31, 2022, or 12.8% of revenue. 

Income from provider relief fund. 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. For the year ended December 31, 2022, we recorded $21.5 million of income from 
provider relief fund related to PHSSE Fund amounts and ARP funds received in 2021 and 2022.  

Depreciation and amortization. Depreciation and amortization expense was $132.3 million for the year ended December 31, 

2023, or 4.5% of revenue, compared to $117.8 million for the year ended December 31, 2022, or 4.5% of revenue.  

Interest expense. Interest expense was $82.1 million for the year ended December 31, 2023 compared to $69.8 million for the 

year ended December 31, 2022. The increase in interest expense was primarily the result of rising interest rates. 

Legal settlements expense. Legal settlements expense for the year ended December 31, 2023 was $394.2 million associated with 

the Desert Hills Litigation. 

Loss on impairment. During the year ended December 31, 2023, we recorded non-cash impairment charges totaling $9.8 million 

related to the closure of certain facilities. 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. Transaction, legal and other costs were $62.0 million for the year ended December 31, 2023 

compared to $23.8 million for the year ended December 31, 2022. 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): 

Legal, accounting and other acquisition-related costs 
Management transition costs 
Termination and restructuring costs 

Year Ended December 31, 
2022 
2023 

31,335    $
23,283     
7,408     
62,026    $

5,741 
11,575 
6,476 
23,792 

  $

  $

(Benefit from) provision for income taxes. 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. 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. 

As we continue to monitor the implications of potential tax legislation in each of our jurisdictions, we may adjust our estimates 

and record additional amounts for tax assets and liabilities. Any adjustments to our tax assets and liabilities could materially impact 
our provision for income taxes and our effective tax rate in the periods in which they are made. 

Year Ended December 31, 2022 compared to the Year Ended December 31, 2021 

Revenue. Revenue increased $296.0 million, or 12.8%, to $2,610.4 million for the year ended December 31, 2022 from $2,314.4 

million for the year ended December 31, 2021. 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%. 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. 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. 
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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. Depreciation and amortization expense was $117.8 million for the year ended December 31, 

2022, or 4.5% of revenue, compared to $106.7 million for the year ended December 31, 2021, or 4.6% of revenue. 

Interest expense. Interest expense was $69.8 million for the year ended December 31, 2022 compared to $77.0 million for the 

year ended December 31, 2021. The decrease in interest expense was primarily the result of a significant reduction to outstanding debt 
in connection with the U.K. Sale. 

Debt extinguishment costs. Debt extinguishment costs were $24.7 million for the year ended December 31, 2021 and 
represented $6.3 million of cash charges and $18.4 million of non-cash charges in connection with the redemption of the 5.625% 
Senior Notes and the 6.500% Senior Notes and the termination of the Prior Credit Facility. 

Loss on impairment. Loss on impairment was $24.3 million for the year ended December 31, 2021. During the second quarter of 
2021, we opened a 260-bed replacement facility in Pennsylvania and recorded a non-cash property impairment charge of $23.2 million 
for the existing facility. Additionally, during the third quarter of 2021, we recorded a $1.1 million non-cash property impairment 
charge for one facility in Louisiana resulting from hurricane damage. 

Transaction, legal and other costs. Transaction, legal and other costs were $23.8 million for the year ended December 31, 2022 

compared to $12.8 million for the year ended December 31, 2021. 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): 

Management transition costs 
Termination and restructuring costs 
Legal, accounting and other acquisition-related costs 

Year Ended December 31, 
2021 
2022 

  $

  $

11,575    $
6,476     
5,741     
23,792    $

- 
5,343 
7,435 
12,778 

Discontinued Operations. 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. The increase in the effective tax rate for the year ended December 31, 2022 was primarily attributable to income tax benefits 
recognized in 2021 from the reversal of valuation allowances and the release of unrecognized tax benefit liabilities. 

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. 

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. 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 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. Routine or maintenance capital expenditures, including information 
technology capital expenditures, were approximately 3% of revenue for the year ended December 31, 2023. 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 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 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 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. 

We had total available cash and cash equivalents of $100.1 million, $97.6 million and $133.8 million at December 31, 2023, 
2022 and 2021, respectively, of which approximately $11.3 million, $3.7 million and $20.1 million, respectively, was held by our 
foreign subsidiaries. Our strategic plan does not require the repatriation of foreign cash in order to fund our operations in the U.S.  

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. 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. 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. 

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.  

As a part of the closing of the Credit Facility on March 17, 2021, we (i) refinanced and terminated the Prior Credit Facility and 

(ii) financed the redemption of all of the outstanding 5.625% Senior Notes. 

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. 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. In 
addition, an unused fee that varies according to our consolidated total net leverage ratio ranging from 0.200% to 0.350% is payable 
quarterly in arrears based on the average daily undrawn portion of the commitments in respect of the Revolving Facility. The interest 
rates and the unused line fee on unused commitments related to the Credit Facility are based upon the following pricing tiers: 

Pricing Tier 
1 
2 
3 
4 
5 

Consolidated Total Net 
Leverage Ratio 
≥ 4.50:1.0 
<4.50:1.0 but ≥ 3.75:1.0 
<3.75:1.0 but ≥ 3.00:1.0 
<3.00:1.0 but ≥ 2.25:1.0 
<2.25:1.0 

  SOFR Loans 

Base Rate 
Loans 

Commitment 
Fee 

2.250%  
2.000%  
1.750%  
1.500%  
1.375%  

1.250 %   
1.000 %   
0.750 %   
0.500 %   
0.375 %   

0.350%
0.300%
0.250%
0.200%
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. Such Incremental Term Loans are structured as an increase of the Term Loan Facility. The maturity date, the 
leverage-based pricing grid, mandatory prepayment events and other terms applicable to the Incremental Term Loans are substantially 
identical to those applicable to the initial $425.0 million term loans incurred under the Term Loan Facility. After giving effect to the 
Incremental Term Loans, the Credit Facility requires quarterly principal repayments for the Term Loan Facility of approximately 
$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. The remaining outstanding principal balance of the 
Term Loan Facility is due on the maturity date of March 17, 2026. 

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. 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”). The Incremental Term Loans were incurred in reliance on the Incremental Ratio Basket, leaving the full 
amount of the Incremental Fixed Basket available for any future Incremental Facilities. 

Subject to certain exceptions, substantially all of our existing and subsequently acquired or organized direct or indirect wholly-
owned U.S. subsidiaries are required to guarantee the repayment of our obligations under the Credit Facility. We and such guarantor 
subsidiaries have granted a security interest in substantially all personal property assets as collateral for the obligations under the 
Credit Facility. 

The Credit Facility contains customary representations and affirmative and negative covenants, including limitations on our 
ability and our subsidiaries’ ability to incur additional debt, grant or permit additional liens, make investments and acquisitions, merge 
or consolidate with others, dispose of assets, pay dividends and distributions, pay junior indebtedness and enter into affiliate 
transactions, in each case, subject to customary exceptions. In addition, the Credit Facility contains financial covenants requiring us on 
a consolidated basis to maintain, as of the last day of any consecutive four fiscal quarter period, a consolidated total net leverage ratio 
of not more than 4.5 to 1.0 (which may be increased to 5.0 to 1.0 for a period of up to four consecutive fiscal quarters following the 
consummation of certain material acquisitions) and an interest coverage ratio of at least 3.0 to 1.0. The Credit Facility also includes 
events of default customary for facilities of this type and upon the occurrence of such events of default, among other things, all 
outstanding loans under the Credit Facility may be accelerated, the lenders’ commitments terminated, and/or the lenders may exercise 
collateral remedies. At December 31, 2023, we were in compliance with all financial covenants. 

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. 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.  

Senior Notes 

5.500% Senior Notes due 2028 

On June 24, 2020, we issued $450.0 million of 5.500% Senior Notes due 2028 (the “5.500% Senior Notes”). The 5.500% Senior 
Notes mature on July 1, 2028 and bear interest at a rate of 5.500% per annum, payable semi-annually in arrears on January 1 and July 
1 of each year, commencing on January 1, 2021. 

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 5.000% 

Senior Notes mature on April 15, 2029 and bear interest at a rate of 5.000% per annum, payable semi-annually in arrears on April 15 
and October 15 of each year, commencing on April 15, 2021. 

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 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. 

5.625% Senior Notes due 2023 

On February 11, 2015, we issued $375.0 million of the 5.625% Senior Notes. On September 21, 2015, we issued $275.0 million 
of additional 5.625% Senior Notes. The additional notes formed a single class of debt securities with the 5.625% Senior Notes issued 
in February 2015. Giving effect to this issuance, we had outstanding an aggregate of $650.0 million of the 5.625% Senior Notes. The 
5.625% Senior Notes were to mature on February 15, 2023 and bear interest at a rate of 5.625% per annum, payable semi-annually in 
arrears on February 15 and August 15 of each year. On March 17, 2021, we redeemed the 5.625% Senior Notes. 

6.500% Senior Notes due 2024 

On February 16, 2016, we issued $390.0 million of the 6.500% Senior Notes. The 6.500% Senior Notes were to mature on 
March 1, 2024 and bear interest at a rate of 6.500% per annum, payable semi-annually in arrears on March 1 and September 1 of each 
year, beginning on September 1, 2016. On March 1, 2021, we redeemed the 6.500% Senior Notes. 

Redemption of 5.625% Senior Notes and 6.500% Senior Notes 

On January 29, 2021, we issued conditional notices of full redemption providing for the redemption in full of $650 million of 

the 5.625% Senior Notes and $390 million of the 6.500% Senior Notes to the holders of such notes.  

On March 1, 2021, we satisfied and discharged the indentures governing the 6.500% Senior Notes. 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.   

On March 17, 2021, we satisfied and discharged the indentures governing the 5.625% Senior Notes. In connection with the 

redemption of the 5.625% Senior Notes, we recorded debt extinguishment costs of $3.3 million, including the write-off of deferred 
financing and premiums costs in the consolidated statement of operations.   

Other long-term debt 

During the year ended December 31, 2021, we repaid other long-term debt of $3.3 million, which is reflected in financing 

activities in the consolidated statement of cash flows. 

Supplemental Guarantor Financial Information 

We conduct substantially all of our business through our subsidiaries. The Senior Notes are jointly and severally guaranteed on 
an unsecured senior basis by all of our subsidiaries that guarantee our obligations under the Credit Facility. The summarized financial 
information presented below is consistent with our consolidated financial statements, except transactions between combining entities 
have been eliminated. Financial information for our combined non-guarantor entities has been excluded pursuant to SEC Regulation 
S-X Rule 13-01. Presented below is condensed financial information for the combined wholly-owned subsidiary guarantors at 
December 31, 2023 and 2022, and for the year ended December 31, 2023.  

43 

 
Summarized balance sheet information (in thousands): 

Current assets 
Property and equipment, net 
Goodwill 
Total noncurrent assets 

$

Current liabilities 
Long-term debt 
Total noncurrent liabilities 
Redeemable noncontrolling interests 
Total equity 

December 31, 

2023 

2022 

$ 

442,813    
1,656,941    
2,105,563    
4,043,891    

827,648    
1,342,548    
1,503,345    
—    
2,155,711    

396,553 
1,517,893 
2,105,227 
3,921,336 

345,606 
1,364,541 
1,629,750 
— 
2,342,533 

Summarized operating results information (in thousands): 

Revenue 
Loss from continuing operations before income taxes 
Net loss 
Net loss attributable to Acadia Healthcare Company, Inc. 

For the Year Ended 
December 31, 2023 

$ 

2,546,288 
(63,035) 
(37,376) 
(37,376) 

Contractual Obligations 

The following table presents a summary of contractual obligations (dollars in thousands): 

Payments Due by Period 

Long-term debt (a) 
Operating lease liabilities (b) 
Finance lease liabilities 
Total obligations and commitments 

Less Than 
1 Year 

1-3 Years 

3-5 Years 
  $  108,635    $  555,067    $  534,625    $  510,624    $ 1,708,951 
165,800 
26,095 
  $  142,408    $  606,885    $  562,821    $  588,732    $ 1,900,846 

32,767     
1,006     

26,018     
2,178     

49,640     
2,178     

57,375     
20,733     

Total 

More Than 
5 Years 

(a)  Amounts include required principal and interest payments. 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. 

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. 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. In preparing our financial statements, we are required to make estimates and assumptions that affect the reported amounts of 
assets, liabilities, revenue, and expenses included in the financial statements. Estimates are based on historical experience and other 
available information, the results of which form the basis of such estimates. While management believes our estimation processes are 
reasonable, actual results could differ from our estimates. The following accounting policies are considered critical to the portrayal of 
our financial condition and operating performance and involve highly subjective and complex assumptions and assessments: 

Revenue and Accounts Receivable 

Our revenue is primarily derived from services rendered to patients for inpatient psychiatric and substance abuse care, outpatient 

psychiatric care and adolescent residential treatment. 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 CMS and other programs; and (iv) individual patients and clients. 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. Contractual adjustments and discounts are based on 
contractual agreements, discount policies and historical experience. Implicit price concessions are based on historical collection 
experience. 

We derive a significant portion of our revenue from Medicare, Medicaid and other payors that receive discounts from 
established billing rates. 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. Management estimates the 
transaction price on a payor-specific basis given its interpretation of the applicable regulations or contract terms. The services 
authorized and provided and related reimbursement are often subject to interpretation that could result in payments that differ from our 
estimates. Additionally, updated regulations and contract renegotiations occur frequently, necessitating regular review and assessment 
of the estimation process by management. 

Settlements under cost reimbursement agreements with third-party payors are estimated and recorded in the period in which the 

related services are rendered and are adjusted in future periods as final settlements are determined. Final determination of amounts 
earned under the Medicare and Medicaid programs often occurs in subsequent years because of audits by such programs, rights of 
appeal and the application of numerous technical provisions. In the opinion of management, adequate provision has been made for any 
adjustments and final settlements. 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. The net adjustments to estimated cost report settlements resulted in an increase to revenue of $1.8 million and $0.1 million for 
the years ended December 31, 2023 and 2022, compared to a decrease to revenue of $5.4 million for the year ended December 31, 
2021.  

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): 

2023 

Year Ended December 31, 
2022 

2021 

Commercial 
Medicare 
Medicaid 
Self-Pay 
Other 
Revenue 

  $ 

Amount 

Amount 

% 
29.6 % 
15.8 % 
49.6 % 
4.0 % 
76,050     
1.0 % 
31,627     
  $  2,928,738      100.0%   $  2,610,399      100.0%   $  2,314,394      100.0 % 

    % 
% 
684,292     
788,895      30.2%   $ 
28.0%   $ 
15.1%    
364,598     
394,227      15.1%    
53.9%     1,319,600      50.6%     1,147,884     
93,425     
24,195     

820,701     
441,761     
1,578,518     
67,583     
20,175     

2.9%    
1.2%    

2.3%    
0.7%    

Amount 

45 

 
 
 
 
 
 
 
   
   
 
 
 
   
   
   
   
 
   
   
   
   
 
The following tables present a summary of our aging of accounts receivable at December 31, 2023 and 2022: 

December 31, 2023 

Commercial 
Medicare 
Medicaid 
Self-Pay 
Other 
Total 

December 31, 2022 

Commercial 
Medicare 
Medicaid 
Self-Pay 
Other 
Total 

Insurance  

  Current 

30-90 

90-150 

>150 

Total 

17.3%    
9.3%    
33.4%    
1.4%    
0.0%    
61.4%    

5.4%    
1.4%    
5.4%    
1.3%    
0.0%    
13.5%    

3.1 %   
0.5 %   
2.5 %   
1.2 %   
0.0 %   
7.3 %   

9.5%   
1.1%   
4.7%   
2.5%   
0.0%   
17.8%   

35.3 %
12.3 %
46.0 %
6.4 %
0.0 %
100.0 %

  Current 

30-90 

90-150 

>150 

Total 

18.0 %   
11.5 %   
31.7 %   
1.2 %   
0.2 %   
62.6 %   

5.3%    
1.7%    
4.5%    
1.4%    
0.0%    
12.9%    

2.8%   
0.7%   
2.6%   
1.2%   
0.0%   
7.3%   

8.4%   
1.4%   
4.7%   
2.6%   
0.1%   
17.2%   

34.5%
15.3%
43.5%
6.4%
0.3%
100.0%

We are subject to medical malpractice and other lawsuits due to the nature of the services we provide. 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. 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. Our reinsurance receivables are recognized consistent with 
the related liabilities and include known claims and any incurred but not reported claims that are covered by current insurance policies 
in place. The reserve for professional and general liability risks was estimated based on historical claims, prior settlements and 
judgments, industry trends, severity factors, and other actuarial assumptions. The estimated accrual for professional and general 
liabilities could be significantly affected should current and future occurrences differ from historical claim trends and expectations. 
While claims are monitored closely when estimating professional and general liability accruals, the complexity of the claims and wide 
range of potential outcomes often hampers timely adjustments to the assumptions used in these estimates. 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. 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 $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. 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. 

Our statutory workers’ compensation program is fully insured with a $0.5 million deductible per accident. 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 reserve 
for workers compensation claims was based upon independent actuarial estimates of future amounts that will be paid to claimants. 
Management believes that adequate provisions have been made for workers’ compensation and professional and general liability risk 
exposures. 

Property and Equipment and Other Long-Lived Assets 

Property and equipment are recorded at cost. Depreciation is calculated on the straight-line basis over the estimated useful lives 

of the assets, which typically range from 10 to 50 years for buildings and improvements, three to seven years for equipment and the 
shorter of the lease term or estimated useful lives for leasehold improvements. When assets are sold or retired, the corresponding cost 
and accumulated depreciation are removed from the related accounts and any gain or loss is recorded in the period of sale or 
retirement. Repair and maintenance costs are expensed as incurred. 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. If this review indicates that the asset will not be 
recoverable, as determined based upon the undiscounted cash flows of the operating asset over the remaining useful life, the carrying 
value of the asset will be reduced to its estimated fair value. 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. During the second quarter of 2021, we opened a 260-bed replacement facility in 
Pennsylvania and recorded a non-cash property impairment charge of $23.2 million for the existing facility. Additionally, during the 
third quarter of 2021, we recorded a $1.1 million non-cash property impairment charge for one facility in Louisiana resulting from 
hurricane damage.  

We performed an impairment review of long-lived assets in the fourth quarter of 2023, 2022 and 2021 and recorded no 

impairment. 

Goodwill and Indefinite-Lived Intangible Assets 

Our goodwill and other indefinite-lived intangible assets, which consist of licenses and accreditations, trade names and 
certificates of need intangible assets that are not amortized, are evaluated for impairment annually during the fourth quarter or more 
frequently if events indicate the carrying value of a reporting unit may not be recoverable.  

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.  

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 second quarter of 2021, we sold one outpatient facility for $4.3 million and recorded a write down of $1.8 
million of goodwill and $0.2 million of intangible assets related to the disposition. During the fourth quarter of 2021, we sold one 
outpatient facility for $1.5 million and recorded a write down of $0.7 million of goodwill and $0.1 million of intangibles related to the 
disposition.  

Income Taxes  

We use the asset and liability method of accounting for income taxes. Under this method, deferred income taxes reflect the net 

tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the 
amounts used for income tax purposes and net operating loss and tax credit carryforwards. The amount of deferred taxes on these 
temporary differences is determined using the tax rates that are expected to apply in the period when the asset is realized or the 
liability is settled, as applicable, based on tax rates and laws in the respective tax jurisdiction enacted as of the balance sheet date. 

We review our deferred tax assets for recoverability and establish a valuation allowance based on historical taxable income, 

projected future taxable income, applicable tax strategies, and the expected timing of the reversals of existing temporary differences. 
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. We recognize interest and penalties, if any, related to unrecognized tax benefits in income tax expense. 

We have accruals for taxes and associated interest that may become payable in future years as a result of audits by tax 

authorities. We accrue for tax contingencies when it is more likely than not that a liability to a taxing authority has been incurred and 
the amount of the contingency can be reasonably estimated. 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. These amounts are reviewed as 
circumstances warrant and adjusted as events occur that affect our potential liability for additional taxes, such as lapsing of applicable 
statutes of limitations, conclusion of tax audits, additional exposure based on current calculations, identification of new issues, release 
of administrative guidance, or rendering of a court decision affecting a particular tax issue. 

Item 7A. Quantitative and Qualitative 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. Financial Statements and Supplementary Data 

Information with respect to this Item is contained in our consolidated financial statements beginning on Page F-1 of this Annual 

Report on Form 10-K. 

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 

None. 

Item 9A. Controls and Procedures 

Evaluation of Disclosure Controls and Procedures 

As of the end of the period covered by this report, our management conducted an evaluation, with the participation of our chief 

executive officer and chief financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-
15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based on this evaluation, our 
chief executive officer and chief financial officer have concluded that our disclosure controls and procedures are effective to ensure 
that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, 
summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and 
communicated to management, including our chief executive officer and chief financial officer, as appropriate to allow timely 
decisions regarding required disclosure. 

Reports on Internal Control Over Financial Reporting 

Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, we have included a report of management’s assessment of the 

design and operating effectiveness of our internal controls as part of this report. Our independent registered public accounting firm 
also reported on the effectiveness of internal control over financial reporting. Management’s report and the independent registered 
public accounting firm’s report are included in our consolidated financial statements beginning on page F-1 of this report under the 
captions entitled “Management’s Report on Internal Control Over Financial Reporting” and “Report of Independent Registered Public 
Accounting Firm.” 

Changes in Internal Control Over Financial Reporting 

There have been no changes in our internal control over financial reporting during the quarter ended December 31, 2023 that 

have materially affected or are reasonably likely to materially affect our internal control over financial reporting. 

Item 9B. Other Information. 

From time to time, certain of our executive officers and directors may enter into, amend or terminate written trading 

arrangements pursuant to Rule 10b5-1 of the Securities Exchange Act of 1934 or otherwise. During the three months ended December 
31, 2023, none of the Company’s directors or officers adopted or terminated any Rule 10b5-1 trading arrangement or non-Rule 10b5-1 
trading arrangement (as such terms are defined in Item 408 of Regulation S-K). 

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. 

Not applicable. 

48 

 
Item 10. Directors, Executive Officers and Corporate Governance. 

Directors 

PART III 

The information with respect to our directors set forth under the caption “Election of Directors” in our Definitive Proxy 

Statement for the Annual Meeting of Stockholders to be held May 23, 2024 is incorporated herein by reference. 

Audit and Risk Committee 

The information with respect to our Audit and Risk Committee and our audit committee financial experts serving on the Audit 

and Risk Committee set forth under the caption “Corporate Governance – Committees of the Board of Directors – Audit and Risk 
Committee” in our Definitive Proxy Statement for the Annual Meeting of Stockholders to be held May 23, 2024 is incorporated herein 
by reference. 

Executive Officers 

The information with respect to our executive officers set forth under the caption “Management – Executive Officers” in our 

Definitive Proxy Statement for the Annual Meeting of Stockholders to be held May 23, 2024 is incorporated herein by reference. 

Section 16(a) Compliance 

The information with respect to compliance with Section 16(a) of the Exchange Act set forth under the caption “Security 
Ownership of Certain Beneficial Owners and Management — Delinquent Section 16(a) Reports” in our Definitive Proxy Statement 
for the Annual Meeting of Stockholders to be held May 23, 2024 is incorporated herein by reference. 

Stockholder Nominees 

The information with respect to the procedures by which stockholders may recommend nominees to the board of directors set 

forth under the caption “Corporate Governance – Nomination of Directors – Nominations by Our Stockholders” in our Definitive 
Proxy Statement for the Annual Meeting of Stockholders to be held May 23, 2024 is incorporated herein by reference. 

Corporate Governance Documents 

We have adopted a Code of Conduct that applies to all of our directors, officers and employees and a Code of Ethics for Senior 

Financial Officers. These documents, as well as the charters of the Audit and Risk Committee, Compensation Committee, Compliance 
Committee, and Nominating and Governance Committee, are available on our website at www.acadiahealthcare.com on the Investors 
webpage under the caption “Corporate Governance.” Upon the written request of any person, we will furnish, without charge, a copy 
of any of these documents. Requests should be directed to Acadia Healthcare Company, Inc., 6100 Tower Circle, Suite 1000, 
Franklin, Tennessee 37067, Attention: Brian Farley, Esq. We intend to disclose any amendments to our Code of Ethics and any waiver 
from a provision of our code, as required by the SEC, on our website. 

Item 11. Executive Compensation 

The information with respect to the compensation of our executive officers set forth under the captions “Executive 
Compensation” and “Compensation Discussion and Analysis” and the information set forth under the captions “Director 
Compensation,” “Corporate Governance – Compensation Committee Interlocks and Insider Participation,” and “Compensation 
Committee Report” in our Definitive Proxy Statement for the Annual Meeting of Stockholders to be held May 23, 2024 is 
incorporated herein by reference. 

49 

 
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 

The information with respect to security ownership of certain beneficial owners and management and related stockholder 

matters set forth under the caption “Security Ownership of Certain Beneficial Owners and Management” in our Definitive Proxy 
Statement for the Annual Meeting of Stockholders to be held May 23, 2024 is incorporated herein by reference. 

Equity Compensation Plan Information 

The following table provides information at December 31, 2023 with respect to compensation plans (including individual 

compensation arrangements) under which shares of Common Stock are authorized for issuance: 

Plan Category 
Equity Compensation Plans Approved by 
   Stockholders (b) 
Equity Compensation Plans Not Approved by 
   Stockholders 
Total 

Number of Securities 
to be Issued upon 
Exercise of 
Outstanding Options, 
Warrants and Rights 

Weighted-Average 
Exercise Price of 
Outstanding Options, 
Warrants and Rights     

Number of Securities 
Remaining Available 
for Future Issuance 
under Equity 
Compensation 
Plans (a) 

2,303,054  (c)  $ 

56.21     

2,634,774  

— 
2,303,054 

$ 

—     

—  
2,634,774  

(a)  Excludes shares to be issued upon exercise of outstanding options and vesting of outstanding performance stock units. 
(b)  Represents securities issued or available for issuance under the Acadia Healthcare Company, Inc. Incentive Compensation Plan. 
(c) 
Includes 336,031 shares that may be issued upon vesting of outstanding performance stock units that vest over three years, 
assuming that maximum performance goals are attained in all three years. 

Item 13. Certain Relationships and Related Transactions, and Director Independence 

The information with respect to certain relationships and related transactions and director independence set forth under the 
captions “Certain Relationships and Related Transactions” and “Corporate Governance – Independence of the Board of Directors” in 
our Definitive Proxy Statement for the Annual Meeting of Stockholders to be held May 23, 2024 is incorporated herein by reference. 

Item 14. Principal Accountant Fees and Services 

The information with respect to the fees paid to and services provided by our principal accountants set forth under the caption 
“Ratification of Appointment of Independent Registered Public Accounting Firm” in our Definitive Proxy Statement for the Annual 
Meeting of Stockholders to be held May 23, 2024 is incorporated herein by reference. 

50 

 
 
 
 
 
 
 
   
   
   
      
 
Item 15. Exhibits and Financial Statement Schedules. 

(a)  The following documents are filed as part of this Annual Report on Form 10-K: 

1. 

Consolidated Financial Statements : 

PART IV 

The consolidated financial statements required to be included in Part II, Item 8, Financial Statements and Supplementary Data, 

begin on Page F-1 and are submitted as a separate section of this report. 

2. 

Financial Statement Schedules : 

All schedules are omitted because they are not applicable or are not required, or because the required information is included in 

the consolidated financial statements or notes in this report. 

3. 

Exhibits : 

Exhibit 
No. 

Exhibit Description 

    2.1 

   Put and Call Option Deed, dated as of December 30, 2020, by and between RemedcoUK Limited and the Company. 

(a) 

    2.2 

    3.1 

    3.2 

    4.1 

    4.2 

    4.3 

    4.4 

    4.5 

    4.6 

    4.7 

   Share Purchase Agreement, dated as of January 7, 2021, by and between RemedcoUK Limited and the Company. (a) 

   Amended and Restated Certificate of Incorporation, as filed on October 28, 2011, with the Secretary of State of the 

State of Delaware, as amended by the Certificate of Amendment filed on May 25, 2017. (b) 

   Amended and Restated Bylaws of the Company, as amended May 25, 2017. (b) 

   Indenture, dated June 24, 2020, by and among the Company, the guarantors party thereto and U.S. Bank National 

Association, as Trustee. (c) 

   Form of 5.500% Senior Note due 2028 (included as Exhibit A1 in Exhibit 4.1). 

   Indenture, dated October 14, 2020, by and among the Company, the guarantors party thereto and U.S. Bank National 

Association, as Trustee. (d) 

   Form of 5.000% Senior Note due 2029 (included as Exhibit A1 in Exhibit 4.3). 

   Amended and Restated Stockholders Agreement, dated as of October 29, 2014, by and among the Company and 

each of the stockholders named therein. (e) 

   Specimen Common Stock Certificate to be issued to holders of the Company’s Common Stock. (f) 

   Third Amended and Restated Registration Rights Agreement, dated as of December 31, 2015, by and among the 

Company and each of the parties named therein. (g) 

    4.8 

   Joinder, dated February 16, 2016, to the Third Amended and Restated Registration Rights Agreement dated as of 

December 31, 2015, by and among the Company and each of the parties named therein. (h) 

    4.9 

    10.1 

   Description of the Company’s Securities. (i)  

   Credit Agreement, dated as of March 17, 2021, by and among the Company, certain subsidiaries of the Company, as 
guarantors, the several banks and other financial institutions as may from time to time become parties thereunder as 
lenders, and Bank of America, N.A., as Administrative Agent and Swingline Lender. (j) 

    10.2 

  Amendment No. 1 to Credit Agreement, dated as of March 30, 2023, by and among the Company, certain 

subsidiaries of the Company, as guarantors, the several banks and other financial institutions as may from time to 
time become parties thereunder as lenders, and Bank of America, N.A., as Administrative Agent and Swingline 
Lender. (k) 

51 

 
 
 
  
    
   
  
  
  
     
  
     
  
  
  
  
  
     
  
     
  
     
  
     
  
  
  
  
  
  
  
     
  
  
  
    
  
    
   10.3 

  Amendment No. 2 to Credit Agreement, dated as of January 18, 2024, by and among the Company, certain 

subsidiaries of the Company, as guarantors, the several banks and other financial institutions as may from time to 
time become parties thereunder as lenders, and Bank of America, N.A., as Administrative Agent and Swingline 
Lender. (aa) 

    10.4 

   Security and Pledge Agreement, dated as of March 17, 2021, by and among the Company, the other obligors party 

thereto and Bank of America, N.A., as Administrative Agent. (j) 

  †10.5 

   Employment Agreement, dated as of January 19, 2021, by and between Acadia Management Company, Inc. and 

Debra K. Osteen. (l) 

  †10.6 

   Amendment to Employment Agreement, dated December 22, 2021, by and between Acadia Management Company, 

Inc. and Debra K. Osteen. (m) 

  †10.7 

   Side Letter to Employment Agreement, dated January 31, 2022, by and between Acadia Management Company, Inc. 

and Debra K. Osteen. (m) 

  †10.8 

   Consultant Services Agreement, dated April 11, 2022, by and between Acadia Management Company, Inc. and 

Debra K. Osteen. (n) 

  †10.9 

   Employment Agreement, dated March 31, 2022, by and among the Company, Acadia Management Company, Inc. 

and Christopher H. Hunter. (n)  

  †10.10 

  Employment Agreement, dated June 1, 2023, by and between Acadia Management Company, Inc. and Heather B. 

Dixon. (o) 

  †10.11 

  Employment Agreement, dated June 30, 2023, by and between Acadia Management Company, Inc. and Brian 

Farley. (p) 

  †10.12 

  First Amendment to Employment Agreement, dated July 6, 2023, by and between Acadia Management Company, 

Inc. and Brian Farley, dated as of June 30, 2023. (p) 

  †10.13 

   Amended and Restated Employment Agreement, dated April 7, 2014, by and among the Company, Acadia 

Management Company, Inc. and Christopher L. Howard. (q) 

  †10.14 

  Separation and Transition Agreement, dated July 5, by and between Acadia Management Company, LLC and 

Christopher L. Howard. (r) 

  †10.15 

   Employment Agreement, dated April 7, 2014, by and among the Company, Acadia Management Company, Inc. and 

David M. Duckworth. (q) 

  †10.16 

  Transition Agreement, dated July 5, 2023, by and between Acadia Management Company, LLC and David M. 

Duckworth. (r) 

  †10.17 

   Employment Agreement, dated July 31, 2019, by and between Acadia Management Company, Inc. and John S. 

Hollinsworth. (s) 

  †10.18 

   Employment Agreement, dated August 6, 2019, by and between Acadia Management Company, Inc. and Laurence 

L. Harrod. (t) 

  †10.19 

  Separation and Consulting Agreement, dated June 28, 2023, by and between Acadia Management Company, LLC 

and Laurence L. Harrod. (r) 

  †10.20 

   Acadia Healthcare Company, Inc. Incentive Compensation Plan, effective May 18, 2023. (u) 

  †10.21 

   Form of Restricted Stock Unit Agreement. (v) 

  †10.22 

   Form of Incentive Stock Option Agreement. (w) 

  †10.23 

   Form of Non-Qualified Stock Option Agreement. (w) 

  †10.24 

   Form of Restricted Stock Agreement. (v) 

52 

 
  
  
  
  
  
  
  
     
  
  
  
  
  
    
  
    
  
    
  
    
  
  
  
    
  
  
  
     
  
    
  
     
  
  
  
  
 
  
  
  
  
  
  †10.25 

   Form of Stock Appreciation Rights Agreement. (w) 

  †10.26 

   Acadia Healthcare Company, Inc. Nonqualified Deferred Compensation Plan, effective February 1, 2013. (x) 

  †10.27 

   Nonmanagement Director Compensation Program, effective January 1, 2013. (x) 

    10.28 

   Form of Indemnification Agreement (for directors and officers affiliated with Waud Capital Partners). (y) 

    10.29 

   Form of Indemnification Agreement (for directors and officers not affiliated with Waud Capital Partners). (y) 

    10.30 

  Settlement Agreement, Release in Full and Indemnification Agreement, dated October 30, 2023, by and among 

Acadia Healthcare Company, Inc., Youth and Family Centered Services of New Mexico, Inc. d/b/a Desert Hills, and 
Shasta N. Inman, as Guardian Ad Litem. (z) 

    10.31 

  Settlement Agreement, Release in Full and Indemnification Agreement, dated October 30, 2023, by and among 

Acadia Healthcare Company, Inc., Youth and Family Centered Services of New Mexico, Inc. d/b/a Desert Hills, and 
Feliz Rael, as Guardian Ad Litem. (z) 

    10.32 

  Settlement Agreement, Release in Full and Indemnification Agreement, dated October 30, 2023, by and among 

Acadia Healthcare Company, Inc., Youth and Family Centered Services of New Mexico, Inc. d/b/a Desert Hills, and 
Alison Endicott-Quiñones, as Guardian Ad Litem. (z) 

    21* 

    22* 

    23* 

   Subsidiaries of the Company. 

   List of Subsidiary Guarantors and Issuers of Guaranteed Securities. 

   Consent of Independent Registered Public Accounting Firm. 

   31.1* 

   Rule 13a-14(a) Certification of the Chief Executive Officer of the Company pursuant to Section 302 of the Sarbanes-

Oxley Act of 2002. 

   31.2* 

   Rule 13a-14(a) Certification of the Chief Financial Officer of the Company pursuant to Section 302 of the Sarbanes-

Oxley Act of 2002. 

   32.1* 

   Section 1350 Certification of Chief Executive Officer of the Company pursuant to Section 906 of the Sarbanes-

Oxley Act of 2002. 

   32.2* 

   Section 1350 Certification of Chief Financial Officer of the Company pursuant to Section 906 of the Sarbanes-Oxley 

Act of 2002. 

       97* 

  Acadia Healthcare Company, Inc. Policy Regarding the Mandatory Recovery of Compensation. 

101.INS** 

   Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its 

XBRL tags are embedded within the Inline XBRL document.  

101.SCH** 

   Inline XBRL Taxonomy Extension Schema with embedded Linkbase Document. 

104 

   The cover page from the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, has been 

formatted in Inline XBRL. 

† 
* 
** 

(a) 

(b) 

(c) 

(d) 

  Indicates management contract or compensatory plan or arrangement. 
  Filed herewith. 
  The XBRL related information in Exhibit 101 to this Annual Report on Form 10-K shall not be deemed “filed” for 
purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability of that 
section and shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 
1933, as amended, except as shall be expressly set forth by specific reference in such filing or document. 

  Incorporated by reference to exhibits filed with the Company’s Annual Report on Form 10-K for the year ended 

December 31, 2020 (File No. 001-35331). 

  Incorporated by reference to exhibits filed with the Company’s Current Report on Form 8-K filed May 25, 2017 

(File No. 001-35331). 

  Incorporated by reference to exhibits filed with the Company’s Current Report on Form 8-K filed June 24, 2020 

(File No. 001-35331). 

  Incorporated by reference to exhibits filed with the Company’s Current Report on Form 8-K filed October 14, 2020 

(File No. 001-35331). 

53 

 
  
  
  
  
  
  
  
  
  
    
  
    
  
    
  
  
  
  
  
     
  
  
  
  
  
  
  
  
  
    
  
  
  
  
  
  
  
     
(e) 

(f) 

(g) 

(h) 

(i) 

(j) 

(k) 

(l) 

  Incorporated by reference to exhibits filed with the Company’s Current Report on Form 8-K filed October 30, 2014 

(File No. 001-35331). 

  Incorporated by reference to exhibits filed with the Company’s registration statement on Form S-1, as amended (File 

No. 333-175523), originally filed with the SEC on November 23, 2011. 

  Incorporated by reference to exhibits filed with the Company’s Current Report on Form 8-K filed January 4, 2016 

(File No. 001-35331). 

  Incorporated by reference to exhibits filed with the Company’s Current Report on Form 8-K filed February 16, 2016 

(File No. 001-35331). 

  Incorporated by reference to exhibits filed with the Company’s Annual Report on Form 10-K for the year ended 

December 31, 2020 (File No. 001-35331). 

  Incorporated by reference to exhibits filed with the Company’s Current Report on Form 10-Q for the three months 

ended March 31, 2021 (File No. 001-35331). 

  Incorporated by reference to exhibits filed with the Company’s Current Report on Form 10-Q for the three months 

ended March 31, 2023 (File No. 001-35331). 

  Incorporated by reference to exhibits filed with the Company’s Current Report on Form 8-K filed January 22, 2021 

(File No. 001-35331). 

(m) 

  Incorporated by reference to exhibits filed with the Company’s Current Report on Form 8-K filed February 1, 2022 

(n) 

(o) 

(p) 

(q) 

(r) 

(s) 

(t) 

(u) 

(v) 

(w) 

(x) 

(y) 

(z) 

(aa) 

(File No. 001-35331). 

  Incorporated by reference to exhibits filed with the Company’s Quarterly Report on Form 10-Q for the three months 

ended March 31, 2022 (File No. 001-35331). 

  Incorporated by reference to exhibits filed with the Company’s Current Report on Form 8-K filed June 2, 2023 (File 

No. 001-35331). 

  Incorporated by reference to exhibits filed with the Company’s Current Report on Form 10-Q for the three months 

ended June 30, 2023 (File No. 001-35331). 

  Incorporated by reference to exhibits filed with the Company’s Current Report on Form 8-K filed April 11, 2014 

(File No. 001-35331). 

  Incorporated by reference to exhibits filed with the Company’s Current Report on Form 8-K filed July 5, 2023 (File 

No. 001-35331). 

  Incorporated by reference to exhibits filed with the Company’s Amendment No. 1 to the Current Report on Form 8-

K filed August 6, 2019 (File No. 001-35331). 

  Incorporated by reference to exhibits filed with the Company’s Current Report on Form 8-K filed August 6, 2019 

(File No. 001-35331). 

  Incorporated by reference to Appendix A to the Company’s Definitive Proxy Statement filed April 7, 2023 (File No. 

001-35331). 

  Incorporated by reference to exhibits filed with the Company’s Current Report on Form 10-Q for the three months 

ended March 31, 2018 (File No. 001-35331). 

  Incorporated by reference to exhibits filed with the Company’s registration statement on Form S-4, as amended (File 

No. 333-175523), originally filed with the SEC on July 13, 2011. 

  Incorporated by reference to exhibits filed with the Company’s Quarterly Report on Form 10-Q for the three months 

ended March 31, 2013 (File No. 001-35331). 

  Incorporated by reference to exhibits filed with the Company’s Current Report on Form 8-K filed November 1, 2011 

(File No. 001-35331). 

  Incorporated by reference to exhibits filed with the Company’s Current Report on Form 8-K filed October 30, 2023 

(File No. 001-35331). 

  Incorporated by reference to exhibits filed with the Company’s Current Report on Form 8-K filed January 19, 2024 

(File No. 001-35331). 

Item 16. Form 10-K Summary. 

None. 

54 

 
 
 
 
 
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this 

report to be signed on its behalf by the undersigned, thereunto duly authorized. 

SIGNATURES 

Acadia Healthcare Company, Inc. 

By: /s/ CHRISTOPHER H. HUNTER 

 Christopher H. Hunter 
 Chief Executive Officer and Director 

Dated: February 28, 2024 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons 

on behalf of the registrant and in the capacities and on the dates indicated. 

Signature 

Title 

Date 

/s/ CHRISTOPHER H. HUNTER 
Christopher H. Hunter 

Chief Executive Officer and Director (Principal 
Executive Officer) 

February 28, 2024 

/s/ HEATHER DIXON 
Heather Dixon 

/s/ REEVE B. WAUD 
Reeve B. Waud 

/s/ JASON R. BERNHARD 
Jason R. Bernhard 

/s/ E. PEROT BISSELL 
E. Perot Bissell 

/s/ MICHAEL J. FUCCI 
Michael J. Fucci 

/s/ VICKY B. GREGG 
Vicky B. Gregg 

/s/ WILLIAM F. GRIECO 
William F. Grieco 

/s/ PATRICE A. HARRIS 
Patrice A. Harris 

/s/ R. DAVID KELLY 
R. David Kelly 

/s/ WADE D. MIQUELON 
Wade D. Miquelon 

/s/ DEBRA K. OSTEEN 
Debra K. Osteen 

Chief Financial Officer (Principal Financial Officer 
and Principal Accounting Officer) 

February 28, 2024 

Chairman of the Board 

February 28, 2024 

February 28, 2024 

February 28, 2024 

February 28, 2024 

February 28, 2024 

February 28, 2024 

February 28, 2024 

February 28, 2024 

February 28, 2024 

February 28, 2024 

Director 

Director 

Director 

Director 

Director 

Director 

Director 

Director 

Director 

55 

 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS 

Management’s Report on Internal Control Over Financial Reporting 
Report of Independent Registered Public Accounting Firm (PCAOB: 42) 
Report of Independent Registered Public Accounting Firm 
Consolidated Balance Sheets at December 31, 2023 and 2022 
Consolidated Statements of Operations for the years ended December 31, 2023, 2022 and 2021 
Consolidated Statements of Comprehensive (Loss) Income for the years ended December 31, 2023, 2022 and 2021 
Consolidated Statements of Equity for the years ended December 31, 2023, 2022 and 2021 
Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022 and 2021  
Notes to Consolidated Financial Statements 

  PAGE 
F-2
F-3
F-4
F-6
F-7
F-8
F-9
F-10
F-11

F-1 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING  

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such 

term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Under the supervision and with the participation of our 
management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of 
our internal control over financial reporting at December 31, 2023 based on the framework in Internal Control — Integrated 
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (COSO). Based 
on that evaluation, our management concluded that our internal control over financial reporting was effective at December 31, 2023. 

Our accompanying consolidated financial statements have been audited by the independent registered public accounting firm 

of Ernst & Young LLP. Reports of the independent registered public accounting firm, including the independent registered public 
accounting firm’s report on our internal control over financial reporting, are included in this report. 

F-2 

 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM  

To the Stockholders and the Board of Directors of  
Acadia Healthcare Company, Inc.  

Opinion on Internal Control over Financial Reporting 

We have audited Acadia Healthcare Company, Inc.’s internal control over financial reporting as of December 31, 2023, based on 
criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway 
Commission (2013 framework) (the COSO criteria). In our opinion, Acadia Healthcare Company, Inc. (the Company) maintained, in 
all material respects, effective internal control over financial reporting as of December 31, 2023, based on the COSO criteria. 

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), 
the consolidated balance sheets of Acadia Healthcare Company, Inc. as of December 31, 2023 and 2022, and the related consolidated 
statements of operations, comprehensive income (loss), equity and cash flows for each of the three years in the period ended December 
31, 2023, and the related notes and our report dated February 28, 2024 expressed an unqualified opinion thereon. 

Basis for Opinion 

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment 
of  the  effectiveness  of  internal  control  over  financial  reporting  included  in  the  accompanying  Management’s  Report  on  Internal 
Control  Over  Financial  Reporting.  Our  responsibility  is  to  express  an  opinion  on  the  Company’s  internal  control  over  financial 
reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with 
respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities 
and Exchange Commission and the PCAOB. 

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit 
to  obtain  reasonable  assurance  about  whether  effective  internal  control  over  financial  reporting  was  maintained  in  all  material 
respects.   

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness 
exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing 
such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our 
opinion. 

Definition and Limitations of Internal Control Over Financial Reporting 

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability 
of  financial  reporting  and  the  preparation  of  financial  statements  for  external  purposes  in  accordance  with  generally  accepted 
accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to 
the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the 
company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements 
in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only 
in  accordance  with  authorizations  of  management  and  directors  of  the  company;  and  (3)  provide  reasonable  assurance  regarding 
prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect 
on the financial statements. 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections 
of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in 
conditions, or that the degree of compliance with the policies or procedures may deteriorate. 

/s/ Ernst & Young LLP  

Nashville, Tennessee  
February 28, 2024 

F-3 

 
  
  
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 

To the Stockholders and the Board of Directors of Acadia Healthcare Company, Inc. 

Opinion on the Financial Statements 

We  have  audited  the  accompanying  consolidated  balance  sheets  of  Acadia  Healthcare  Company,  Inc.  (the  Company)  as  of 
December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income (loss), equity and cash flows 
for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated 
financial  statements”).  In  our  opinion,  the  consolidated  financial  statements  present  fairly,  in  all  material  respects,  the  financial 
position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three 
years in the period ended December 31, 2023, in conformity with U.S. generally accepted accounting principles.  

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), 
the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control-
Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and 
our report dated February 28, 2024, expressed an unqualified opinion thereon.   

Basis for Opinion  

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the 
Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to 
be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations 
of the Securities and Exchange Commission and the PCAOB. 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit 
to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. 
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to 
error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence 
regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used 
and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe 
that our audits provide a reasonable basis for our opinion. 

Critical Audit Matter  

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was 
communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material 
to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the 
critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, 
by  communicating  the  critical  audit  matter below, providing  a separate opinion  on  the  critical  audit  matter  or  on  the  accounts  or 
disclosures to which it relates. 

Description of the 
Matter 

Revenue Recognition 
For the year ended December 31, 2023, the Company recognized $2.9 billion of revenue from continuing
operations. As discussed in Note 3 of the consolidated financial statements, the Company determines the
transaction  price  for  services  to  patients  based  on  established  billing  rates  reduced  by  contractual
adjustments  provided  to  third-party  payors,  discounts  provided  to  uninsured  patients  and  implicit  price
concessions. Contractual adjustments and discounts are based on contractual agreements, discount policies 
and historical experience. Implicit price concessions are based primarily on historical collection experience.

How We Addressed 
the Matter in Our 
Audit 

Auditing the Company’s revenue recognition and its estimates of contractual adjustments, discounts and
implicit price concessions was complex and judgmental due to the significant data inputs and subjective
assumptions utilized in estimating the related amounts. Various reimbursement programs under which these
amounts must be estimated are complex and subject to interpretation and adjustment. Additionally, updated
regulations and contract renegotiations occur frequently, necessitating regular review and assessment of the 
estimation process by management.  

We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over
the Company’s revenue recognition, including controls over key data inputs to the contractual adjustment,
discount  and  implicit  price  concession  estimates  and  management’s  review  and  consideration  of
retrospective analyses of historical expected cash collections compared to subsequent actual collections. 

F-4 

 
 
  
  
  
To  test  the  revenue recognized, we  performed  audit  procedures  that  included,  among  others,  testing  the
validity  of  a  sample  of  revenue  transactions  and  the  completeness  and  accuracy  of  data  inputs  to  the
estimates of contractual adjustments, discounts and implicit price concessions, including payor contractual
terms and historical collection experience. We assessed the historical accuracy of management’s estimates
based on subsequent collection experience and used the assessment as a source of potential corroborative 
or  contrary  evidence  supporting  management’s  assumptions  of  future  collections  of  existing  accounts
receivable.   

/s/ Ernst & Young LLP  
We have served as the Company's auditor since 2006. 

Nashville, Tennessee 
February 28, 2024 

F-5 

 
  
  
  
  
 
Acadia Healthcare Company, Inc. 
Consolidated Balance Sheets 

ASSETS 

Current assets: 

Cash and cash equivalents 
Accounts receivable, net 
Other current assets 

Total current assets 
Property and equipment, net 
Goodwill 
Intangible assets, net 
Deferred tax assets 
Operating lease right-of-use assets 
Other assets 
Total assets 

LIABILITIES AND EQUITY 

Current liabilities: 

Current portion of long-term debt 
Accounts payable 
Accrued salaries and benefits 
Current portion of operating lease liabilities 
Other accrued liabilities 

Total current liabilities 

Long-term debt 
Deferred tax liabilities 
Operating lease liabilities 
Other liabilities 
Total liabilities 
Redeemable noncontrolling interests 
Equity: 

Preferred stock, $0.01 par value; 10,000,000 shares authorized, 
   no shares issued 
Common stock, $0.01 par value; 180,000,000 shares authorized; 
 91,263,989 and 89,913,659 issued and outstanding as of 
 December 31, 2023 and 2022, respectively 
Additional paid-in capital 
Retained earnings 

Total equity 
Total liabilities and equity 

  $ 

  $ 

  $ 

December 31, 

2023 

2022 

(In thousands, except share and per 
share amounts) 

100,073    $ 
361,451     
134,476     
596,000     
2,266,610     
2,225,962     
73,278     
6,658     
117,780     
72,553     
5,358,841    $ 

29,219    $ 
156,132     
141,901     
26,268     
532,261     
885,781     
1,342,548     
1,931     
100,808     
140,113     
2,471,181     
105,686     

97,649  
322,439  
86,037  
506,125  
1,952,045  
2,222,805  
76,041  
2,950  
135,238  
92,697  
4,987,901  

21,250  
104,723  
125,298  
26,463  
110,592  
388,326  
1,364,541  
92,588  
116,429  
125,033  
2,086,917  
88,257  

— 

—  

913     
2,649,340     
131,721     
2,781,974     
5,358,841    $ 

899  
2,658,440  
153,388  
2,812,727  
4,987,901  

  $ 

See accompanying notes. 

F-6 

 
 
 
 
 
 
 
  
 
 
 
 
 
 
  
 
 
 
 
   
   
   
   
   
   
   
   
   
 
 
 
 
   
   
   
   
   
   
   
   
   
   
   
 
 
 
 
   
   
   
   
 
Acadia Healthcare Company, Inc. 
Consolidated Statements of Operations 

2023 

Year Ended December 31, 
2022 
(In thousands, except per share amounts) 

2021 

Revenue 
Salaries, wages and benefits (including equity-based compensation 
   expense of $32,289, $29,635 and $37,530, respectively) 
Professional fees 
Supplies 
Rents and leases 
Other operating expenses 
Income from provider relief fund 
Depreciation and amortization 
Interest expense, net 
Debt extinguishment costs 
Legal settlements expense 
Loss on impairment 
Gain on sale of property 
Transaction, legal and other costs 

Total expenses 

(Loss) income from continuing operations before income taxes 
(Benefit from) provision for income taxes 
(Loss) income from continuing operations 
Loss from discontinued operations, net of taxes 
Net (loss) income 
Net income attributable to noncontrolling interests 
Net (loss) income attributable to Acadia Healthcare Company, Inc. 
Basic (loss) earnings per share attributable to Acadia Healthcare 
     Company, Inc. stockholders: 

(Loss) income from continuing operations attributable to Acadia 
     Healthcare Company, Inc. 
Loss from discontinued operations 
Net (loss) income attributable to Acadia Healthcare Company, Inc. 

Diluted (loss) earnings per share attributable to Acadia Healthcare 
     Company, Inc. stockholders: 

(Loss) income from continuing operations attributable to Acadia 
     Healthcare Company, Inc. 
Loss from discontinued operations 
Net (loss) income attributable to Acadia Healthcare Company, Inc. 

Weighted-average shares outstanding: 

Basic 
Diluted 

  $ 

2,928,738    $ 

2,610,399    $ 

2,314,394 

1,572,330     
176,013     
105,992     
46,552     
388,906     
(6,419)    
132,349     
82,125     
—     
394,181     
9,790     
(9,747)    
62,026     
2,954,098     
(25,360)    
(9,699)    
(15,661)    
—     
(15,661)    
(6,006)    
(21,667)   $ 

1,393,434     
158,013     
100,200     
45,462     
349,277     
(21,451)    
117,769     
69,760     
—     
—     
—     
—     
23,792     
2,236,256     
374,143     
94,110     
280,033     
—     
280,033     
(6,894)    
273,139    $ 

1,243,804 
136,739 
90,702 
38,519 
301,339 
(17,900) 
106,717 
76,993 
24,650 
— 
24,293 
— 
12,778 
2,038,634 
275,760 
67,557 
208,203 
(12,641) 
195,562 
(4,927) 
190,635 

(0.24)   $ 
—     
(0.24)   $ 

3.05    $ 
—     
3.05    $ 

2.29 
(0.14) 
2.15 

(0.24)   $ 
—     
(0.24)   $ 

2.98    $ 
—     
2.98    $ 

2.24 
(0.14) 
2.10 

90,949     
90,949     

89,680     
91,555     

88,769 
90,793 

  $ 

  $ 

  $ 

  $ 

  $ 

See accompanying notes. 

F-7 

 
 
 
 
 
 
 
  
  
 
 
 
 
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
 
 
 
   
 
 
 
 
 
 
 
   
 
 
 
   
   
 
Acadia Healthcare Company, Inc. 
Consolidated Statements of Comprehensive (Loss) Income 

Net (loss) income 
Other comprehensive (loss) income: 
Foreign currency translation loss 
Gain on derivative instruments, net of tax of $0.1 million 
U.K. Sale 

Other comprehensive income 
Comprehensive (loss) income 
Comprehensive income attributable to noncontrolling interests 
Comprehensive (loss) income attributable to Acadia Healthcare 
    Company, Inc. 

See accompanying notes. 

2023 

Year Ended December 31, 
2022 
(In thousands) 

2021 

(15,661 )   $ 

280,033    $ 

195,562 

—      
—      
—      
—      
(15,661 )    
(6,006 )    

—     
—     
—     
—     
280,033     
(6,894)    

(4,260) 
19 
375,606 
371,365 
566,927 
(4,927) 

(21,667 )   $ 

273,139    $ 

562,000 

F-8 

 
 
 
 
 
 
 
  
  
 
 
 
 
   
 
 
 
   
   
   
   
   
   
   
 
Acadia Healthcare Company, Inc. 
Consolidated Statements of Equity 
(In thousands) 

Balance at January 1, 2021 

Common stock issued under stock incentive plans 
Repurchase of shares for payroll tax withholdings, 
  net of proceeds from stock option exercises 
Equity-based compensation expense 
Other comprehensive income 
Other 
Net income attributable to Acadia Healthcare 
  Company, Inc. stockholders 

Balance at December 31, 2021 

Common stock issued under stock incentive plans 
Repurchase of shares for payroll tax withholdings, 
  net of proceeds from stock option exercises 
Equity-based compensation expense 
Other 
Net income attributable to Acadia Healthcare 
  Company, Inc. stockholders 

Balance at December 31, 2022 

Common stock issued under stock incentive plans 
Repurchase of shares for payroll tax withholdings, 
  net of proceeds from stock option exercises 
Equity-based compensation expense 
Other 
Net loss attributable to Acadia Healthcare 
  Company, Inc. stockholders 

Balance at December 31, 2023 

Common Stock 

Amount 

Shares 

88,024    $ 
1,004     

Additional 
Paid- 
in Capital 
880    $ 2,580,327    $ 
22,019     
10     

(Accumulated 
Deficit) 
Retained 
Earnings 

Accumulated 
Other 
Comprehensive    
Loss 
(371,365)   $  (310,386)   $ 1,899,456 
22,029 

—     

—     

Total 

—     
—     
—     
—     

—     
—     
—     
—     

(5,734)    
37,530     
—     
2,208     

—     
—     
371,365     
—     

—     
—     
—     
—     

(5,734) 
37,530 
371,365 
2,208 

—     
89,028     
886     

—     
—     
890      2,636,350     
11,604     

9     

—     
—     
—     

—     
—     
—     

(17,792)    
29,635     
(1,357)    

—     
89,914     
1,350     

—     
—     
899      2,658,440     
8,183     
14     

—     
—     
—     

—     
—     
—     

(52,532)    
32,289     
2,960     

—     
—     
—     

—     
—     
—     

—     
—     
—     

—     
—     
—     

190,635     
190,635 
(119,751)     2,517,489 
11,613 

—     

—     
—     
—     

(17,792) 
29,635 
(1,357) 

273,139     
273,139 
153,388      2,812,727 
8,197 

—     

—     
—     
—     

(52,532) 
32,289 
2,960 

—     
91,264    $ 

—     
—     
913    $ 2,649,340    $ 

—     
(21,667) 
(21,667)    
—    $  131,721    $ 2,781,974 

See accompanying notes. 

F-9 

 
 
 
 
 
   
   
   
 
 
 
 
   
   
   
   
   
 
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
 
Acadia Healthcare Company, Inc. 
Consolidated Statements of Cash Flows 

Operating activities: 
Net (loss) income 
Adjustments to reconcile net (loss) income to net cash provided by continuing 
   operating activities: 

Depreciation and amortization 
Amortization of debt issuance costs 
Equity-based compensation expense 
Deferred income taxes 
Loss from discontinued operations, net of taxes 
Debt extinguishment costs 
Legal settlements expense 
Loss on impairment 
Gain on sale of property 
Other 
Change in operating assets and liabilities, net of effect of acquisitions: 

Accounts receivable, net 
Other current assets 
Other assets 
Accounts payable and other accrued liabilities 
Accrued salaries and benefits 
Other liabilities 
Government relief funds 

Net cash provided by continuing operating activities 
Net cash provided by discontinued operating activities 
Net cash provided by operating activities 
Investing activities: 
Cash paid for acquisitions, net of cash acquired 
Cash paid for capital expenditures 
Proceeds from U.K. Sale 
Settlement of foreign currency derivatives 
Proceeds from sale of property and equipment 
Cash paid for purchase of finance lease 
Other 
Net cash (used in) provided by investing activities 
Financing activities: 
Borrowings on long-term debt 
Borrowings on revolving credit facility 
Principal payments on revolving credit facility 
Principal payments on long-term debt 
Repayment of long-term debt 
Payment of debt issuance costs 
Repurchase of shares for payroll tax withholdings, net of proceeds from stock option exercises 
Contributions from noncontrolling partners in joint ventures 
Distributions to noncontrolling partners in joint ventures 
Acquisition of ownership interests from noncontrolling partners 
Other 
Net cash used in financing activities 
Effect of exchange rate changes on cash 
Net increase (decrease) in cash and cash equivalents 
Cash and cash equivalents at beginning of the period 
Cash and cash equivalents at end of the period 
Supplemental Cash Flow Information: 
Cash paid for interest 
Cash paid for income taxes 
Effect of acquisitions: 
Assets acquired, excluding cash 
Liabilities assumed 
Redeemable noncontrolling interest resulting from an acquisition 
Cash paid for acquisitions, net of cash acquired 

2023 

Year Ended December 31, 
2022 
(In thousands) 

2021 

  $ 

(15,661)    $ 

280,033    $ 

195,562 

132,349     
3,322     
32,289     
(93,984)     
—     
—     
394,181     
9,790     
(9,747)     
3,168     

(39,012)     
8,880     
989     
17,404     
16,532     
10,815     
(8,975)     
462,340     
—     
462,340     

(349)     
(424,133)     
—     
—     
29,422     
—     
(2,159)     
(397,219)     

—     
40,000     
(35,000)     
(21,250)     
—     
—     
(44,335)     
2,958     
(5,107)     
—     
37     
(62,697)     
—     
2,424     
97,649     
100,073    $ 

80,745    $ 
66,397    $ 

6,766    $ 
(128)     
(6,289)     
349    $ 

117,769     
3,261     
29,635     
16,545     
—     
—     
—     
—     
—     
2,680     

(41,978)     
(17,626)     
2,252     
5,174     
6,804     
15,090     
(39,070)     
380,569     
—     
380,569     

(9,507)     
(296,149)     
—     
—     
7,074     
—     
(7,248)     
(305,830)     

—     
—     
(95,000)     
(18,594)     
—     
—     
(6,179)     
15,362     
(1,004)     
(5,540)     
52     
(110,903)     
—     
(36,164)     
133,813     
97,649    $ 

65,687    $ 
86,195    $ 

10,756    $ 
(1,249)     
—     
9,507    $ 

106,717 
4,071 
37,530 
11,772 
12,641 
24,650 
— 
24,293 
— 
491 

2,448 
1,968 
(10,770) 
6,164 
9,755 
(14,940) 
(38,128) 
374,224 
253 
374,477 

(139,015) 
(244,811) 
1,511,020 
(84,795) 
3,493 
(31,401) 
(1,394) 
1,013,097 

425,000 
500,000 
(330,000) 
(7,969) 
(2,227,935) 
(7,964) 
16,295 
4,536 
(1,588) 
— 
(6,900) 
(1,636,525) 
4,067 
(244,884) 
378,697 
133,813 

93,669 
79,304 

176,365 
(37,350) 
— 
139,015 

  $ 

  $ 
  $ 

  $ 

  $ 

See accompanying notes. 

F-10 

 
 
 
 
 
 
 
   
   
 
 
 
 
 
 
 
 
 
 
   
   
   
   
   
   
   
   
   
   
 
 
 
   
   
   
   
   
   
   
   
   
   
 
 
 
   
   
   
   
   
   
   
   
 
 
 
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
 
 
 
 
 
 
   
   
 
Acadia Healthcare Company, Inc. 
Notes to Consolidated Financial Statements 
December 31, 2023 

1. Description of Business and Basis of Presentation 

Description of Business 

Acadia Healthcare Company, Inc. (the “Company”) develops and operates acute inpatient psychiatric facilities, specialty 
treatment facilities, comprehensive treatment centers (“CTCs”), residential treatment centers and facilities providing outpatient 
behavioral healthcare services to serve the behavioral healthcare and recovery needs of communities throughout the United States 
(the “U.S.”) and Puerto Rico. At December 31, 2023, the Company operated 253 behavioral healthcare facilities with approximately 
11,200 beds in 38 states and Puerto Rico. 

On January 19, 2021, the Company completed the sale of its 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. Sale allowed the Company to reduce its indebtedness and focus on its U.S. operations. 
As a result of the U.K. Sale, the Company reported, for all periods presented, results of operations and cash flows of the U.K. 
operations as discontinued operations in the accompanying financial statements. See Note 21 – U.K. Sale. 

Basis of Presentation 

The business of the Company is conducted through limited liability companies, partnerships and C-corporations. The 
Company’s consolidated financial statements include the accounts of the Company and all subsidiaries controlled by the Company 
through its direct or indirect ownership of majority interests and exclusive rights granted to the Company as the controlling member 
of an entity. All intercompany accounts and transactions have been eliminated in consolidation. 

The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted 
accounting principles (“GAAP”). The preparation of financial statements in conformity with GAAP requires management to make 
estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual 
results could differ from those estimates. The majority of the Company’s expenses are “cost of revenue” items. Costs that could be 
classified as general and administrative expenses include the Company’s corporate office costs, which were $153.3 million, $124.3 
million and $108.2 million for the years ended December 31, 2023, 2022 and 2021, respectively. 

Certain reclassifications have been made to prior years to conform to the current year presentation. 

2. Summary of Significant Accounting Policies 

Cash and Cash Equivalents 

The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. 
At times, cash and cash equivalent balances may exceed federally insured limits. Management believes that the Company mitigates 
any risks by depositing cash and investing in cash equivalents with major financial institutions. 

Insurance 

The Company is subject to medical malpractice and other lawsuits due to the nature of the services the Company provides. A 
portion of the Company’s 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. The Company has 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. The 
Company’s reinsurance receivables are recognized consistent with the related liabilities and include known claims and any incurred 
but not reported claims that are covered by current insurance policies in place. The reserve for professional and general liability 
risks was estimated based on historical claims, prior settlements and judgments, industry trends, severity factors, and other actuarial 
assumptions. The estimated accrual for professional and general liabilities could be significantly affected should current and future 
occurrences differ from historical claim trends and expectations. While claims are monitored closely when estimating professional 
and general liability accruals, the complexity of the claims and wide range of potential outcomes often hampers timely adjustments 
to the assumptions used in these estimates. The Company 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. 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 $103.6 million at December 31, 2022, 

F-11 

 
of which $12.1 million was included in other accrued liabilities and $91.5 million was included in other long-term liabilities. The 
Company estimates receivables for the portion of professional and general liability reserves that are recoverable under the 
Company’s insurance policies. 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. 

The Company’s statutory workers’ compensation program is fully insured with a $0.5 million deductible per accident. 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 reserve for workers compensation claims was based upon independent actuarial estimates of future amounts that will 
be paid to claimants. Management believes that adequate provisions have been made for workers’ compensation and professional 
and general liability risk exposures. 

Property and Equipment and Other Long-Lived Assets 

Property and equipment are recorded at cost. Depreciation is calculated on the straight-line basis over the estimated useful 
lives of the assets, which typically range from 10 to 50 years for buildings and improvements, three to seven years for equipment 
and the shorter of the lease term or estimated useful lives for leasehold improvements. When assets are sold or retired, the 
corresponding cost and accumulated depreciation are removed from the related accounts and any gain or loss is recorded in the 
period of sale or retirement. Repair and maintenance costs are expensed as incurred. Depreciation expense was $132.3 million, 
$117.8 million and $106.7 million for the years ended December 31, 2023, 2022 and 2021, 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. If this review indicates that the asset will not be 
recoverable, as determined based upon the undiscounted cash flows of the operating asset over the remaining useful life, the 
carrying value of the asset will be reduced to its estimated fair value. 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, the 
Company 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. During the second quarter of 2021, the 
Company opened a 260-bed replacement facility in Pennsylvania and recorded a non-cash property impairment charge of $23.2 
million for the existing facility. Additionally, during the third quarter of 2021, the Company recorded a $1.1 million non-cash 
property impairment charge for one facility in Louisiana resulting from hurricane damage, both of which are included in loss on 
impairment on the condensed consolidated statements of operations.  

The Company performed an impairment review of long-lived assets in the fourth quarter of 2023, 2022 and 2021 and recorded 

no impairment.  

Goodwill and Indefinite-Lived Intangible Assets  

The Company’s goodwill and other indefinite-lived intangible assets, which consist of licenses and accreditations, trade 
names and certificates of need intangible assets that are not amortized, are evaluated for impairment annually during the fourth 
quarter or more frequently if events indicate the carrying value of a reporting unit may not be recoverable.  

As of the Company’s annual impairment tests on October 1, 2023, 2022 and 2021, the Company had one reporting unit, 
behavioral healthcare services. The fair value of the Company’s behavioral healthcare services reporting unit substantially exceeded 
its carrying value, and therefore no impairment was recorded.  

During the year ended December 31, 2023, the Company 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 second quarter of 2021, the Company sold one outpatient facility for $4.3 million 
and recorded a write down of $1.8 million of goodwill and $0.2 million of intangible assets related to the disposition. During the 
fourth quarter of 2021, the Company sold one outpatient facility for $1.5 million and recorded a write down of $0.7 million of 
goodwill and $0.1 million of intangibles related to the disposition.  

Stock Compensation 

The Company measures and recognizes the cost of employee services received in exchange for awards of equity instruments 

based on the grant-date fair value in accordance with the Financial Accounting Standards Board (the “FASB”) Accounting 
Standards Codification (“ASC”) 718, “ Compensation — Stock Compensation.” The Company uses the Black-Scholes valuation 
model to determine grant-date fair value for stock options and recognizes straight-line amortization of share-based compensation 
expense over the requisite service period of the respective awards. The fair values of performance stock units are determined based 

F-12 

 
on the closing price of the Company’s common stock on the trading date immediately prior to the grant date for units subject to 
performance conditions. 

Earnings Per Share 

Basic and diluted earnings per share are calculated in accordance with FASB ASC 260, “Earnings Per Share,” based on the 
weighted-average number of shares outstanding in each period and dilutive stock options and non-vested shares, to the extent such 
securities have a dilutive effect on earnings per share. 

Income Taxes 

The Company uses the asset and liability method of accounting for income taxes. Under this method, deferred income taxes 

reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting 
purposes and the amounts used for income tax purposes and net operating loss and tax credit carryforwards. The amount of deferred 
taxes on these temporary differences is determined using the tax rates that are expected to apply in the period when the asset is 
realized or the liability is settled, as applicable, based on tax rates and laws in the respective tax jurisdiction enacted as of the 
balance sheet date. 

The Company reviews its deferred tax assets for recoverability and establishes a valuation allowance based on historical 
taxable income, projected future taxable income, applicable tax strategies, and the expected timing of the reversals of existing 
temporary differences. 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. 

The Company records a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be 

taken in a tax return. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits in income tax 
expense. 

The Company has accruals for taxes and associated interest that may become payable in future years as a result of audits by 
tax authorities. The Company accrues for tax contingencies when it is more likely than not that a liability to a taxing authority has 
been incurred and the amount of the contingency can be reasonably estimated. Although management believes that the positions 
taken on previously filed tax returns are reasonable, the Company nevertheless has established tax and interest reserves in 
recognition that various taxing authorities may challenge the positions taken by the Company resulting in additional liabilities for 
taxes and interest. These amounts are reviewed as circumstances warrant and adjusted as events occur that affect our potential 
liability for additional taxes, such as lapsing of applicable statutes of limitations, conclusion of tax audits, additional exposure based 
on current calculations, identification of new issues, release of administrative guidance, or rendering of a court decision affecting a 
particular tax issue. 

Recent Accounting Pronouncements 

In December 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-09 “Income Taxes (“Topic 740”) 
“Improvements to Income Tax Disclosures Topic 740”. ASU 2023-09 is intended to enhance the transparency and decision 
usefulness of income tax disclosures. This guidance is effective for fiscal years beginning after December 15, 2024, with early 
adoption permitted, and may be applied either prospectively or retrospectively. The Company is currently evaluating the impact of 
ASU 2023-09 on the Company’s consolidated financial statements. 

In November 2021, the FASB issued ASU 2021-10, “Government Assistance (Topic 832)” (“ASU 2021-10”). ASU 2021-10 
provides guidance to increase the transparency of government assistance including the disclosure of (1) the types of assistance, (2) 
an entity’s accounting for the assistance, and (3) the effect of the assistance on an entity’s financial statements. ASU 2021-10 
applies to all business entities except for not-for-profit entities within the scope of Topic 958, Not-for-Profit Entities, and employee 
benefit plans within the scope of Topic 960, Plan Accounting — Defined Benefit Pension Plans, Topic 962, Plan Accounting — 
Defined Contribution Pension Plans, and Topic 965, Plan Accounting — Health and Welfare Benefit Plans that account for a 
transaction with a government by applying a grant or contribution accounting model by analogy to other accounting guidance (for 
example, a grant model within IAS 20, Accounting for Government Grants and Disclosure of Government Assistance, or Subtopic 
958-605, Not-For-Profit Entities — Revenue Recognition). ASU 2021-10 is effective for fiscal years beginning after December 15, 
2021. The Company adopted ASU 2021-10 for the year ended December 31, 2022. See Note 10 – The CARES Act for additional 
information on the Company’s accounting for government grants received. 

In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference 

Rate Reform on Financial Reporting” (“ASU 2020-04”). ASU 2020-04 provides optional guidance for a limited period of time to 
ease the potential burden in accounting for or recognizing the effects of reference rate reform on financial reporting and applies only 
to contracts, hedging relationships and other transactions that reference the London Interbank Offered Rate (“LIBOR”) or another 
reference rate expected to be discontinued because of reference rate reform. ASU 2020-04 is effective as of March 12, 2020 through 
December 31, 2024. Entities may adopt ASU 2020-04 as of any date from the beginning of an interim period that includes or is 
subsequent to March 12, 2020 or prospectively from a date within an interim period that includes or is subsequent to March 12, 

F-13 

 
2020, up to the date that the financial statements are available to be issued. The Company adopted ASU 2020-04 for the quarter 
ended March 31, 2023. See Note 13 - Long Term Debt for additional information on the Company’s accounting for the reference 
rate reform. There is no significant impact on the Company’s consolidated financial statements. 

3. Revenue 

Revenue is primarily derived from services rendered to patients for inpatient psychiatric and substance abuse care, outpatient 
psychiatric care and residential treatment. The services provided by the Company have no fixed duration and can be terminated by 
the patient or the facility at any time, and therefore, each treatment is its own stand-alone contract. 

Services ordered by a healthcare provider in an episode of care are not separately identifiable and therefore have been 
combined into a single performance obligation for each contract. The Company recognizes revenue as its performance obligations 
are completed. The performance obligation is satisfied over time as the customer simultaneously receives and consumes the benefits 
of the healthcare services provided. For inpatient services, the Company recognizes revenue equally over the patient stay on a daily 
basis. For outpatient services, the Company recognizes revenue equally over the number of treatments provided in a single episode 
of care. Typically, patients and third-party payors are billed within several days of the service being performed or the patient being 
discharged, and payments are due based on contract terms. 

As the Company’s performance obligations relate to contracts with a duration of one year or less, the Company elected the 

optional exemption in ASC 606-10-50-14(a). Therefore, the Company is not required to disclose the transaction price for the 
remaining performance obligations at the end of the reporting period or when the Company expects to recognize the revenue. The 
Company has minimal unsatisfied performance obligations at the end of the reporting period as the Company’s patients typically are 
under no obligation to remain admitted in the Company’s facilities. 

At December 31, 2023 and 2022, estimated implicit price concessions of $68.3 million and $61.4 million, respectively, had 

been recorded as reductions to the Company’s accounts receivable balances to enable the Company to record its revenues and 
accounts receivable at the estimated amounts the Company expected to collect.  

The Company disaggregates revenue from contracts with customers by service type and by payor. 

The Company’s facilities and services provided by the facilities can generally be classified into the following categories: acute 

inpatient psychiatric facilities; specialty treatment facilities; CTCs; and residential treatment centers. 

Acute inpatient psychiatric facilities. Acute inpatient psychiatric facilities provide a high level of care in order to stabilize 
patients that are either a threat to themselves or to others. The acute setting provides 24-hour observation, daily intervention and 
monitoring by psychiatrists. 

Specialty treatment facilities. Specialty treatment facilities include residential recovery facilities and eating disorder facilities. 

The Company provides a comprehensive continuum of care for adults with addictive disorders and co-occurring mental disorders. 
Inpatient, including detoxification and rehabilitation, partial hospitalization and outpatient treatment programs give patients access 
to the least restrictive level of care. 

Comprehensive treatment centers. CTCs specialize in providing medication-assisted treatment in an outpatient setting to 

individuals addicted to opioids such as opioid analgesics (prescription pain medications). 

Residential treatment centers. Residential treatment centers treat patients with behavioral disorders in a non-hospital setting. 

The facilities balance therapy activities with social, academic and other activities. 

The table below presents total revenue from continuing operations attributed to each category (in thousands): 

Acute inpatient psychiatric facilities 
Specialty treatment facilities 
Comprehensive treatment centers 
Residential treatment centers 
Other 
Revenue 

2023 
1,489,248    $
614,220     
500,242     
325,028     
—     
2,928,738    $

Year Ended December 31, 
2022 
1,330,757    $ 
564,671     
419,940     
295,031     
—     
2,610,399    $ 

  $

  $

2021 
1,126,872 
510,929 
385,635 
283,169 
7,789 
2,314,394 

The Company receives payments from the following sources for services rendered in its 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.  

F-14 

 
 
 
 
 
 
 
   
   
 
   
   
   
   
 
The Company determines 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. Contractual adjustments and discounts 
are based on contractual agreements, discount policies and historical experience. Implicit price concessions are based on historical 
collection experience. Most of the Company’s facilities have contracts containing variable consideration. However, it is unlikely a 
significant reversal of revenue will occur when the uncertainty is resolved, and therefore, the Company has included the variable 
consideration in the estimated transaction price. Subsequent changes resulting from a patient’s ability to pay are recorded as bad 
debt expense, which is included as a component of other operating expenses in the consolidated statements of operations. Bad debt 
expense for the years ended December 31, 2023, 2022 and 2021 was not significant. 

The Company derives a significant portion of its revenue from Medicare, Medicaid and other payors that receive discounts 

from established billing rates. The Medicare and Medicaid regulations and various managed care contracts under which these 
discounts must be estimated are complex, subject to interpretation and adjustment, and may include multiple reimbursement 
mechanisms for different types of services provided in the Company’s facilities and cost settlement provisions. Management 
estimates the transaction price on a payor-specific basis given its interpretation of the applicable regulations or contract terms. The 
services authorized and provided and related reimbursement are often subject to interpretation that could result in payments that 
differ from the Company’s estimates. Additionally, updated regulations and contract renegotiations occur frequently, necessitating 
regular review and assessment of the estimation process by management. 

Settlements under cost reimbursement agreements with third-party payors are estimated and recorded in the period in which 

the related services are rendered and are adjusted in future periods as final settlements are determined. Final determination of 
amounts earned under the Medicare and Medicaid programs often occurs in subsequent years because of audits by such programs, 
rights of appeal and the application of numerous technical provisions. In the opinion of management, adequate provision has been 
made for any adjustments and final settlements. 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. The Company’s 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. The net adjustments to estimated cost report settlements resulted in an increase to revenue of 
$1.8 million and $0.1 million, respectively, for the years ended December 31, 2023 and 2022 compared to a decrease to revenue of 
$5.4 million for the year ended December 31, 2021. 

The Company provides care without charge to patients who are financially unable to pay for the healthcare services they 
receive based on Company policies and federal and state poverty thresholds. Such amounts determined to qualify as charity care are 
not reported as revenue. The cost of providing charity care services were $8.2 million, $6.4 million and $3.8 million for the years 
ended December 31, 2023, 2022 and 2021, respectively. The estimated cost of charity care services was determined using a ratio of 
cost to gross charges determined from the Company’s most recently filed Medicare cost reports and applying that ratio to the gross 
charges associated with providing charity care for the period. 

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): 

2023 

Year Ended December 31, 
2022 

2021 

Commercial 
Medicare 
Medicaid 
Self-Pay 
Other 
Revenue 

Amount 

Amount 
  $  820,701     
441,761     
    1,578,518     
67,583     
20,175     

% 
29.6% 
15.8% 
49.6% 
76,050     
4.0% 
1.0% 
31,627     
  $  2,928,738      100.0%   $  2,610,399      100.0%   $ 2,314,394      100.0% 

   % 
% 
28.0%   $  788,895      30.2%   $  684,292     
15.1%    
364,598     
394,227      15.1%    
53.9%     1,319,600      50.6%     1,147,884     
93,425     
24,195     

2.9%    
1.2%    

2.3%    
0.7%    

Amount 

F-15 

 
 
 
 
 
 
 
   
   
 
 
 
  
   
   
  
 
   
   
   
 
4. Earnings Per Share 

The following table sets forth the computation of basic and diluted (loss) earnings per share for the years ended December 31, 

2023, 2022 and 2021 (in thousands, except per share amounts): 

Numerator: 

(Loss) income from continuing operations attributable to Acadia 
    Healthcare Company, Inc. 
Loss from discontinued operations 
Net (loss) income attributable to Acadia Healthcare 
    Company, Inc. 

  $ 

(21,667)   $
—     

273,139    $
—     

203,276 
(12,641) 

  $ 

(21,667)   $

273,139    $

190,635 

Year Ended December 31, 
2022 

2021 

2023 

Denominator: 

Weighted average shares outstanding for basic 
   earnings per share 
Effects of dilutive instruments 
Shares used in computing diluted earnings per 
   common share 

Basic (loss) earnings per share attributable to Acadia 
   Healthcare Company, Inc. stockholders: 

(Loss) income from continuing operations attributable to 
     Acadia Healthcare Company, Inc. 
Loss from discontinued operations 
Net (loss) income attributable to Acadia Healthcare 
    Company, Inc. 

Diluted (loss) earnings per share attributable to Acadia 
   Healthcare Company, Inc. stockholders: 

(Loss) income from continuing operations attributable to 
     Acadia Healthcare Company, Inc. 
Loss from discontinued operations 
Net (loss) income attributable to Acadia Healthcare 
    Company, Inc. 

90,949     
—     

89,680     
1,875     

88,769 
2,024 

90,949     

91,555     

90,793 

  $ 

(0.24)   $
—     

3.05    $
—     

2.29 
(0.14) 

  $ 

(0.24)   $

3.05    $

2.15 

  $ 

(0.24)   $
—     

2.98    $
—     

2.24 
(0.14) 

  $ 

(0.24)   $

2.98    $

2.10 

For the year ended December 31, 2023, approximately 0.9 million outstanding shares of restricted stock and shares of 
common stock issuable upon exercise of outstanding stock option awards have been excluded in the calculation of weighted-average 
shares outstanding-diluted. These shares are excluded from the calculation of diluted earnings per share in the condensed 
consolidated statement of operations because the net loss for the year ended December 31, 2023 causes such securities to be anti-
dilutive. Approximately 0.3 million, 0.1 million and 0.3 million shares of common stock issuable upon exercise of outstanding stock 
options were excluded from the calculation of diluted earnings per share for the years ended December 31, 2023, 2022 and 2021, 
respectively, because their effect would have been anti-dilutive. 

5. Acquisitions  

The Company’s acquisition strategy is to acquire and develop behavioral healthcare facilities and improve operating results 

within its facilities and its other behavioral healthcare operations.  

In July 2023, the Company 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. 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, the Company acquired four CTCs located in Georgia from Brand New Start Treatment Centers. 

On December 31, 2021, the Company 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. At the time of the acquisition, CenterPointe operated four acute 
inpatient hospitals with 306 beds and ten outpatient locations primarily in Missouri. 

F-16 

 
 
 
 
 
 
 
  
  
 
 
   
 
   
 
   
 
   
   
   
 
 
   
 
 
   
 
   
 
 
   
 
 
   
 
   
Goodwill 

The following table summarizes changes in goodwill for the years ended December 31, 2023 and 2022 (in thousands): 

Balance at January 1, 2022 
Increase from acquisitions 
Adjustments related to 2021 acquisitions 
Increase from contributions of redeemable noncontrolling interests 
Balance at December 31, 2022 
Increase from acquisitions 
Increase from contributions of redeemable noncontrolling interests 
Balance at December 31, 2023 

  $ 

  $ 

2,199,937 
9,488 
8,761 
4,619 
2,222,805 
337 
2,820 
2,225,962 

Of the increases to goodwill from acquisitions in 2023 and 2022, the Company expects $0.3 million and $9.5 million to be 

tax-deductible for the years ended December 31, 2023 and 2022, respectively. 

6. Other current assets 

Other current assets consisted of the following (in thousands): 

Prepaid expenses 
Insurance receivable – current portion 
Other receivables 
Income taxes receivable 
Workers’ compensation deposits – current portion 
Assets held for sale 
Inventory 
Other 
Other current assets 

December 31, 

2023 

2022 

  $

  $

36,085    $
33,579     
22,084     
12,416     
12,000     
11,496     
5,300     
1,516     
134,476    $

27,052 
10,158 
15,371 
5,767 
12,000 
8,347 
5,087 
2,255 
86,037 

7. Property and Equipment 

Property and equipment consisted of the following at December 31, 2023 and 2022 (in thousands): 

Land 
Building and improvements 
Equipment 
Construction in progress 

Less: accumulated depreciation 
Property and equipment, net 

December 31, 

2023 

2022 

183,347    $

2,064,353   
365,826   
420,430   
3,033,956   
(767,346)  
2,266,610    $

169,137 
1,797,809 
292,200 
349,473 
2,608,619 
(656,574) 
1,952,045 

  $

  $

During the year ended December 31, 2023, the Company 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.  

The Company has recorded assets held for sale within other current assets on the consolidated balance sheets for closed 

properties actively marketed of $11.5 million and $8.3 million at December 31, 2023 and 2022, respectively. 

F-17 

 
 
   
   
   
   
   
   
 
 
 
 
 
 
  
 
   
   
   
   
   
   
   
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8. Other Intangible Assets 

Other identifiable intangible assets and related accumulated amortization consisted of the following at December 31, 2023 and 

2022 (in thousands): 

  Gross Carrying Amount 
December 31, 
2023 

December 31, 
2022 

  Accumulated Amortization   
December 31, 
December 31, 
2022 
2023 

Intangible assets subject to amortization: 
Non-compete agreements 

Intangible assets not subject to amortization: 
Licenses and accreditations 
Trade names 
Certificates of need 

Total 

 $ 

1,131  $ 

1,131  $ 

(1,131)  $ 

(1,131) 

11,681   
42,588   
19,009   
73,278   
74,409  $ 

11,512   
45,935   
18,594   
76,041   
77,172  $ 

—   
—   
—   
—   
(1,131)  $ 

— 
— 
— 
— 
(1,131) 

 $ 

All the Company’s definite-lived intangible assets are fully amortized. The Company’s licenses and accreditations, trade 

names and certificate of need intangible assets have indefinite lives and are, therefore, not subject to amortization.  

During the year ended December 31, 2023, the Company recorded a non-cash indefinite-lived intangible asset impairment 

charge 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. 

9. Leases 

The Company’s lease portfolio primarily consists of finance and operating real estate leases integral for facility operations. 
The original terms of the leases typically range from five to thirty years with optional renewal periods. A minimal portion of the 
Company’s lease portfolio consists of non-real estate leases, including copiers and equipment, which generally have lease terms of 
one to three years and have insignificant lease obligations. 

The Company elected the accounting policy practical expedients by class of underlying asset in ASC 842 “Leases” to: (i) 

combine associated lease and non-lease components into a single lease component; and (ii) exclude recording short-term leases as 
right-of-use assets and liabilities on the consolidated balance sheets. Non-lease components, which are not significant overall, are 
combined with lease components. 

Operating lease liabilities are recorded at the present value of remaining lease payments not yet paid for the lease term 
discounted using the incremental borrowing rate associated with each lease. Operating lease right-of-use assets represent operating 
lease liabilities adjusted for prepayments, accrued lease payments, lease incentives and initial direct costs. Certain of the Company’s 
leases include renewal or termination options. Calculation of operating lease right-of-use assets and liabilities include the initial 
lease term unless it is reasonably certain a renewal or termination option will be exercised. Variable components of lease payments 
fluctuating with a future index or rate, as well as those related to common area maintenance costs, are not included in determining 
lease liabilities and are expensed as incurred. Most of the Company’s leases do not contain implicit borrowing rates, and therefore, 
incremental borrowing rates were calculated based on information available at the lease commencement date. The Company reviews 
service agreements for embedded leases and records right-of-use assets and liabilities as necessary. 

The Company recorded non-cash operating lease right-of-use asset impairment charges of $2.3 million related to the closure 

of certain facilities, which is included in loss on impairment in the condensed consolidated statements of operations. 

F-18 

 
 
 
 
 
  
  
  
 
 
 
  
 
 
 
 
  
 
 
 
  
 
  
  
  
 
  
 
Lease Position 

The Company recorded the following at December 31, 2023 and 2022 on the consolidated balance sheets (in thousands):  

Right-of-Use Assets 

Balance Sheet Classification 

Finance lease right-of-use assets 
Operating lease right-of-use assets 
Total 

  Property and equipment, net 

  Operating lease right-of-use assets 

Lease Liabilities 

Balance Sheet Classification 

Current: 
Finance lease liabilities 
Operating lease liabilities 
Noncurrent: 
Finance lease liabilities 
Operating lease liabilities 
Total 

  Other accrued liabilities 

  Current portion of operating lease liabilities 

  Other liabilities 

  Operating lease liabilities 

December 31, 
2023 

December 31, 
2022 

$ 

$ 

7,872 
117,780 
125,652 

$ 

$ 

8,250 
135,238 
143,488 

December 31, 
2023 

December 31, 
2022 

$ 

$ 

990 
26,268 

10,896 
100,808 
138,962 

$ 

$ 

990 
26,463 

10,858 
116,429 
154,740 

Weighted-average remaining lease terms and discount rates were as follows at December 31, 2023 and 2022: 

Weighted-average remaining lease term (in years): 
Finance 
Operating 

Weighted-average discount rate: 
Finance 
Operating 

December 31, 

2023 

2022 

20.9 
8.1 

5.1%    
5.7%    

21.9 
8.4 

5.1% 
5.0% 

Lease Costs 

The Company recorded the following lease costs for the years ended December 31, 2023, 2022 and 2021 (in thousands): 

Finance lease costs: 
Depreciation of leased assets 
Interest of lease liabilities 
Total finance lease costs 

Operating lease costs 
Variable lease costs 
Short term lease costs 
Other lease costs 

Total rents and leases 

Total lease costs 

  $

  $

$

Year Ended December 31, 

2023 

2022 

2021 

378 
1,028 
1,406 

34,400 
3,319 
3,237 
5,596 
46,552 

  $

  $

378 
1,041 
1,419 

34,349 
3,129 
2,605 
5,379 
45,462 

  $

  $

47,958   

$

46,881   

$

378 
2,174 
2,552 

28,233 
2,488 
3,257 
4,541 
38,519 

41,071 

F-19 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
 
 
 
 
 
 
   
 
 
   
 
 
 
 
   
 
 
 
 
 
 
 
   
 
 
 
 
   
 
 
 
 
 
   
   
 
 
 
 
 
 
 
   
   
 
 
 
 
 
 
 
  
  
 
 
 
   
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
   
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
   
 
   
 
 
Other  

Undiscounted future cash flows for finance and operating leases recorded on the consolidated balance sheet were as follows at 

December 31, 2023 (in thousands): 

2023 
2024 
2025 
2026 
2027 
Thereafter 
Total minimum lease payments 
Less: amount of lease payments representing interest 
Present value of future minimum lease payments 
Less: Current portion of lease liabilities 
Noncurrent lease liabilities 

Finance Leases 

Operating Leases 

$

$

1,006 
1,089 
1,089 
1,089 
1,089 
20,733 
26,095 
14,209 
11,886 
990 
10,896 

$

$

32,767 
28,062 
21,578 
14,670 
11,348 
57,375 
165,800 
38,724 
127,076 
26,268 
100,808 

Supplemental data for the years ended December 31, 2023, 2022 and 2021 were as follows (in thousands): 

Cash paid for amounts included in the measurement of 
lease liabilities: 
Operating cash flows for operating leases 
Operating cash flows for finance leases 
Financing cash flows for finance leases 

Right-of-use assets obtained in exchange for lease 
obligations: 
Operating leases 
Finance leases 

  $ 
  $ 
  $ 

  $ 
  $ 

Year Ended December 31, 

2023 

2022 

2021 

34,940 
1,028 

  $ 
  $ 
(38)    $ 

33,836 
1,041 

  $ 
  $ 
(51)    $ 

27,508 
2,174 
31,136 

14,714 
— 

  $ 
  $ 

31,294 
— 

  $ 
  $ 

63,279 
— 

10. The CARES Act  

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. On April 24, 2020, then President Trump signed into law the 
Paycheck Protection Program and Health Care Enhancement Act (the “PPP Act”). Among other things, the PPP Act allocated $75 
billion to eligible healthcare providers to help offset losses and expenses related to the novel coronavirus known as COVID-19 
(“COVID-19”). The $75 billion allocated under the PPP Act was in addition to the $100 billion allocated to healthcare providers for 
the same purposes in the CARES Act and was disbursed to providers under terms and conditions similar to the CARES Act funds. 
The Company accounts for government grants by analogizing to the grant model in accordance with International Accounting 
Standard (“IAS”) 20, Accounting for Government Grants and Disclosure of Government Assistance, and as such, has recognized 
income from grants in line with the recognition of expenses or the loss of revenues for which the grants are intended to compensate. 
The Company recognizes grants once both of the following conditions are met: (i) the Company is able to comply with the relevant 
terms and conditions of the grant and (ii) the grant will be received. 

During 2020, the Company participated in certain relief programs offered through the CARES Act, including receipt of 
approximately $34.9 million relating to the Public Health and Social Services Emergency Fund (“PHSSE Fund”), also known as the 
Provider Relief Fund. During the fourth quarter of 2020, the Company recorded approximately $32.8 million of income from 
provider relief fund related to PHSSE Fund amounts received in 2020. 

In 2021, the Company received $24.2 million of additional funds from the PHSSE Fund. During the fourth quarter of 2021, 

the Company recorded $17.9 million of income from provider relief fund related to PHSSE Fund amounts received. During the year 
ended December 31, 2022, the Company received $7.7 million of additional funds from the PHSSE Fund and $14.2 million from 
the American Rescue Plan (“ARP”) Rural Payments for Hospitals. During the year ended December 31, 2022, the Company 
recorded $21.5 million of income from provider relief fund related to PHSSE Fund and ARP funds received. During the year ended 
December 31, 2023, the Company recorded $6.4 million of income from provider relief fund related to ARP funds received and 

F-20 

 
 
 
 
  
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
 
 
 
   
 
   
 
 
 
   
 
   
 
   
 
 
 
   
 
   
 
 
 
 
repaid the remaining balance of ARP funds 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.  

Healthcare providers were required to sign an attestation confirming receipt of the PHSSE Fund amounts and agree to the 

terms and conditions of payment. Under the terms and conditions for receipt of the payment, the Company was allowed to use the 
funds to cover lost revenues and healthcare costs related to COVID-19, and the Company was required to properly and fully 
document the use of these funds to the U.S. Department of Health and Human Services. The reporting of the funds is subject to 
future audit for compliance with the terms and conditions. The Company recognized PHSSE Fund amounts to the extent it had 
qualifying COVID-19 expenses or lost revenues as permitted under the terms and conditions.  

During 2020, the Company applied for and received approximately $45.2 million of payments from the CMS Accelerated and 

Advance Payment Program. Of the $45.2 million of advance payments received in 2020, the Company repaid approximately $25.1 
million of advance payments during 2021 and made additional repayments of approximately $20.1 million during the year ended 
December 31, 2022, to eliminate the liability. 

In addition, the Company received a 2% increase in facilities’ Medicare reimbursement rate as a result of the temporary 

suspension of Medicare sequestration from May 1, 2020, to March 31, 2022, which was reduced to 1% on April 1, 2022 and was 
eliminated effective July 1, 2022.  

The CARES Act also provided for certain federal income and other tax changes. The Company received a cash benefit of 
approximately $39.3 million for 2020 relating to the delay of payment of the employer portion of Social Security payroll taxes. The 
Company repaid half of the $39.3 million of payroll tax deferrals during the third quarter of 2021 and repaid the remaining portion 
in the third quarter 2022 to eliminate the liability. 

These regulatory changes were temporary and expired at the end of the COVID-19 public health emergency on May 11, 2023.  

11. Commitments and Contingencies 

The Company is, from time to time, subject to various claims, lawsuits, governmental investigations and regulatory actions, 

including claims for damages for personal injuries, medical malpractice, overpayments, breach of contract, securities law violations, 
tort and employment related claims. In these actions, plaintiffs request a variety of damages, including, in some instances, punitive 
and other types of damages that may not be covered by insurance. In addition, healthcare companies are subject to numerous 
investigations by various governmental agencies. Certain of the Company’s individual facilities have received, and from time to 
time, other facilities may receive, subpoenas, civil investigative demands, audit requests and other inquiries from, and may be 
subject to investigation by, federal and state agencies. These investigations can result in repayment obligations and violations of the 
federal 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. In addition, the False Claims Act permits private parties to bring qui 
tam, or “whistleblower,” suits against companies that submit false claims for payments to, or improperly retain overpayments from, 
the government. Some states have adopted similar state whistleblower and false claims provisions. 

Desert Hills 

From October 2018 to August 2020, the Company, its subsidiary Youth and Family Centered Services of New Mexico 

(“Desert Hills”), and FamilyWorks, a not-for-profit treatment foster care program to which Desert Hills provided management 
services, including day-to-day administration of the program, via a management services agreement, were among a number of 
defendants named in five lawsuits (collectively, the “Desert Hills Litigation”) filed in New Mexico State District Court (the “District 
Court”). These lawsuits each related to abuse by a foster parent, Clarence Garcia, that occurred in foster homes where FamilyWorks 
had placed children. In 2021, the Company finalized out-of-court settlements for two of the five cases for amounts covered under 
the Company’s professional liability insurance: Dorsey, as Guardian ad Litem of M.R. v. Clarence Garcia, et al., and Higgins, as 
Guardian ad Litem of J.H. v. Clarence Garcia, et al. While the plaintiffs in those cases had claims pending against FamilyWorks, 
and FamilyWorks had raised claims or potential claims against the Company, in February 2024, the parties in each of those cases 
jointly notified the District Court that proposed settlements of all claims had been reached and that, pending the District Court's 
approval of such proposed settlements, the proposed settlements would also resolve all claims between FamilyWorks and the 
Company. The Company currently reasonably expects the proposed settlements to be approved by the District Court in the coming 
months.  

On July 7, 2023, in connection with one of the lawsuits in the Desert Hills Litigation styled Inman v. Garcia, et al, Case No. 
D-117-CV-2019-00136 (the “Inman Litigation”), a jury awarded the plaintiff compensatory damages of $80.0 million and punitive 
damages of $405.0 million. This award far exceeded the Company’s reasonable expectation based on the previously resolved 
complaints and far exceeded any precedent for comparable cases.  

F-21 

 
On October 30, 2023, the Company and Desert Hills entered into settlement agreements in connection with the Inman 

Litigation, as well as two other related cases – Rael v. Garcia, et al, Case No. D-117-CV-2019-00135 and Endicott-Quinones v. 
Garcia, et al, Case No. D-117-CV-2019-00137 (together with the Inman Litigation, 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 either the Company or Desert Hills. On January 19, 2024, pursuant to the terms of the 
settlement agreements, the Company 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 30, 2024, a sixth lawsuit styled CNRAG, Inc. as Legal Guardian of A.C. v. Garcia et al., No. D-117-CV-2024-

00045 was filed in the District Court alleging similar claims as the previous five lawsuits in the Desert Hills Litigation. The lawsuit 
has not been formally served. The ward in this sixth lawsuit was referenced in prior criminal charges against Garcia five years ago; 
however, prior to this lawsuit, neither the ward nor guardian made contact with the Company about a possible claim. The Company 
determined that a lawsuit from this plaintiff was unlikely because no claims had ever been asserted and the statute of limitations had 
expired. Plaintiff’s allegations assert certain claims, which, if true, may toll the statute of limitations. At this time, the Company is 
not able to quantify the ultimate liability, if any, in connection with this sixth lawsuit. No additional victims are referenced in the 
prior criminal charges against Garcia.  

Securities Litigation 

On April 1, 2019, a consolidated complaint was filed against the Company and certain former and current officers in the 
lawsuit styled St. Clair County Employees’ Retirement System v. Acadia Healthcare Company, Inc., et al., Case No. 3:19-cv-00988, 
which is pending in the United States District Court for the Middle District of Tennessee. The complaint is brought on behalf of a 
class consisting of all persons (other than defendants) who purchased securities of the Company between April 30, 2014 and 
November 15, 2018, and alleges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the 
“Exchange Act”) and Rule 10b-5 promulgated thereunder. On September 30, 2022, the court entered an order certifying a class 
consisting of all persons who purchased or otherwise acquired the common stock of the Company between April 30, 2014 and 
November 15, 2018.   

Derivative Actions 

On February 21, 2019, a purported stockholder filed a related derivative action on behalf of the Company against certain 
former and current officers and directors in the lawsuit styled Davydov v. Jacobs, et al., Case No. 3:19-cv-00167, which is pending 
in the United States District Court for the Middle District of Tennessee. The complaint alleges claims for violations of Section 10(b) 
and 14(a) of the Exchange Act, breach of fiduciary duty, waste of corporate assets, and unjust enrichment. On May 23, 2019, a 
purported stockholder filed a second related derivative action on behalf of the Company against certain former and current officers 
and directors in the lawsuit styled Beard v. Jacobs, et al., Case No. 3:19-cv-0441, which is pending the United States District Court 
for the Middle District of Tennessee. The complaint alleges claims for violations of Sections 10(b), 14(a), and 21D of the Exchange 
Act, breach of fiduciary duty, waste of corporate assets, unjust enrichment, and insider selling. On June 11, 2019, the Davydov and 
Beard actions were consolidated. On February 22, 2021, the court entered an order staying the case. On October 23, 2020, a 
purported stockholder filed a third related derivative action on behalf of the Company against former and current officers and 
directors in the lawsuit styled Pfenning v. Jacobs, et al., Case No. 2020-0915-NAC, which is pending in the Court of Chancery of 
the State of Delaware. The complaint alleges claims for breach of fiduciary duty. On February 17, 2021, the court entered an order 
staying the case. On February 24, 2021, a purported stockholder filed a fourth derivative action on behalf of the Company against 
former and current officers and directors in the lawsuit styled Solak v. Jacobs, et al., Case No. 2021-0163-NAC, which is pending in 
the Court of Chancery of the State of Delaware. The complaint alleges claims for breach of fiduciary duty, unjust enrichment, waste 
of corporate assets, and insider selling.   

Government Investigation 

In the fall of 2017, the Office of Inspector General (the “OIG”) issued subpoenas to three of the Company’s facilities 
requesting certain documents from January 2013 to the date of the subpoenas. The U.S. Attorney’s Office for the Middle District of 
Florida issued a civil investigative demand to one of the Company’s facilities in December 2017 requesting certain documents from 
November 2012 to the date of the demand. In April 2019, the OIG issued subpoenas relating to six additional facilities requesting 
certain documents and information from January 2013 to the date of the subpoenas. In June 2023, the State of Nevada issued a 
subpoena relating to one of the same facilities as part of the same investigation The government’s investigation of each of these 
facilities is focused on claims not eligible for payment because of alleged violations of certain regulatory requirements relating to, 
among other things, medical necessity, admission eligibility, discharge decisions, length of stay and patient care issues. The 
Company has reached a tentative agreement to resolve the matter and the anticipated financial impact of such a resolution is $19.9 
million and has been recorded within other accrued liabilities on the condensed consolidated balance sheets and within transaction, 
legal and other costs on the condensed consolidated statement of operations.  

F-22 

 
12. Other accrued liabilities 

Other accrued liabilities consisted of the following (in thousands): 

Accrued Desert Hills settlement 
Accrued expenses 
Accrued interest 
Insurance liability – current portion 
Cost report payable 
Accrued property taxes 
Contract liabilities 
Finance lease liabilities 
Government relief funds 
Income taxes payable 
Other 
Other accrued liabilities 

13. Long-Term Debt 

Long-term debt consisted of the following (in thousands): 

Credit Facility: 
Term Loan A 
Revolving Line of Credit 
5.500% Senior Notes due 2028 
5.000% Senior Notes due 2029 
Less: unamortized debt issuance costs, discount and 
   premium 

Less: current portion 
Long-term debt 

Credit Facility 

December 31, 

2023 
393,696    $
80,733     
18,046     
12,486     
9,265     
7,097     
2,165     
990     
—     
—     
7,783     
532,261    $

2022 

— 
26,699 
17,596 
12,128 
13,738 
9,009 
6,653 
990 
8,975 
1,338 
13,466 
110,592 

  $

  $

December 31, 

2023 

2022 

  $

377,188    $
80,000    
450,000     
475,000     

398,438 
75,000 
450,000 
475,000 

(10,421)    

(12,647) 
    1,371,767      1,385,791 
(21,250) 
  $ 1,342,548    $ 1,364,541 

(29,219)    

On March 17, 2021, the Company 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. The Revolving Facility further provides for a $20.0 million subfacility for the issuance of letters 
of credit.  

On March 30, 2023, the Company entered into the 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 the Company’s option, one, three or six months, plus an adjustment of 0.10% (“Adjusted Term 
SOFR”). After giving effect to the First Amendment, borrowings under the Credit Facility bear interest at a rate equal to, at the 
Company’s 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 the consolidated total net leverage ratio. In addition, an unused fee that 
varies according to the consolidated total net leverage ratio of the Company ranging from 0.200% to 0.350% is payable quarterly in 
arrears based on the average daily undrawn portion of the commitments in respect of the Revolving Facility.  

On January 18, 2024, the Company 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. The maturity 
date, the leverage-based pricing grid, mandatory prepayment events and other terms applicable to the Incremental Term Loans are 
substantially identical to those applicable to the initial $425.0 million term loans incurred under the Term Loan Facility. After 
giving effect to the Incremental Term Loans, the Credit Facility requires quarterly principal repayments for the Term Loan Facility 

F-23 

 
 
 
 
 
 
 
  
 
   
   
   
   
   
   
   
   
   
   
 
 
 
 
 
 
 
 
 
  
 
 
 
   
   
   
   
 
   
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. The remaining outstanding 
principal balance of the Term Loan Facility is due on the maturity date of March 17, 2026. 

The Company has 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. 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 of the Company at the time of determination (the “Incremental 
Fixed Basket”) and (ii) additional amounts that would not cause the Company’s consolidated senior secured net leverage ratio to 
exceed 3.5 to 1.0 (the “Incremental Ratio Basket”). The Incremental Term Loans were incurred in reliance on the Incremental Ratio 
Basket, leaving the full amount of the Incremental Fixed Basket available for any future Incremental Facilities. 

Subject to certain exceptions, substantially all of the Company’s existing and subsequently acquired or organized direct or 
indirect wholly-owned U.S. subsidiaries are required to guarantee the repayment of the Company’s obligations under the Credit 
Facility. The Company and such guarantor subsidiaries have granted a security interest in substantially all personal property assets 
as collateral for the obligations under the Credit Facility. 

The Credit Facility contains customary representations and affirmative and negative covenants, including limitations on the 

Company’s and its subsidiaries’ ability to incur additional debt, grant or permit additional liens, make investments and acquisitions, 
merge or consolidate with others, dispose of assets, pay dividends and distributions, pay junior indebtedness and enter into affiliate 
transactions, in each case, subject to customary exceptions. In addition, the Credit Facility contains financial covenants requiring the 
Company on a consolidated basis to maintain, as of the last day of any consecutive four fiscal quarter period, a consolidated total net 
leverage ratio of not more than 4.5 to 1.0 (which may be increased to 5.0 to 1.0 for a period of up to four consecutive fiscal quarters 
following the consummation of certain material acquisitions) and an interest coverage ratio of at least 3.0 to 1.0. The Credit Facility 
also includes events of default customary for facilities of this type and upon the occurrence of such events of default, among other 
things, all outstanding loans under the Credit Facility may be accelerated, the lenders’ commitments terminated, and/or the lenders 
may exercise collateral remedies. At December 31, 2023, the Company was in compliance with all financial covenants. 

During the year ended December 31, 2023, the Company borrowed $40.0 million on the Revolving Facility and repaid $35.0 

million of the balance outstanding. During the year ended December 31, 2022, the Company repaid $95.0 million of the balance 
outstanding on the Revolving Facility. The Company 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 its workers’ 
compensation insurance program at December 31, 2023.  

Senior Notes 

5.500% Senior Notes due 2028 

On June 24, 2020, the Company issued $450.0 million of 5.500% Senior Notes due 2028 (the “5.500% Senior Notes”). The 
5.500% Senior Notes mature on July 1, 2028 and bear interest at a rate of 5.500% per annum, payable semi-annually in arrears on 
January 1 and July 1 of each year, commencing on January 1, 2021.  

5.000% Senior Notes due 2029 

On October 14, 2020, the Company issued $475.0 million of 5.000% Senior Notes due 2029 (the “5.000% Senior Notes”). 

The 5.000% Senior Notes mature on April 15, 2029 and bear interest at a rate of 5.000% per annum, payable semi-annually in 
arrears on April 15 and October 15 of each year, commencing on April 15, 2021. 

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 the Company’s ability and the ability of its 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 the Company’s assets; and (vii) create liens on assets. 

The Senior Notes issued by the Company are guaranteed by each of the Company’s subsidiaries that guarantee the Company’s 

obligations under the Credit Facility. The guarantees are full and unconditional and joint and several. 

The Company may redeem the Senior Notes at its option, in whole or part, at the dates and amounts set forth in the applicable 

indentures. 

F-24 

 
5.625% Senior Notes due 2023 

On February 11, 2015, the Company issued $375.0 million of 5.625% Senior Notes due 2023 (the “5.625% Senior Notes”). 

On September 21, 2015, the Company issued $275.0 million of additional 5.625% Senior Notes. The additional notes formed a 
single class of debt securities with the 5.625% Senior Notes issued in February 2015. Giving effect to this issuance, the Company 
had outstanding an aggregate of $650.0 million of 5.625% Senior Notes. The 5.625% Senior Notes were to mature on February 15, 
2023 and bear interest at a rate of 5.625% per annum, payable semi-annually in arrears on February 15 and August 15 of each year. 
On March 17, 2021, the Company redeemed the 5.625% Senior Notes. 

6.500% Senior Notes due 2024 

On February 16, 2016, the Company issued $390.0 million of 6.500% Senior Notes due 2024 (the “6.500% Senior Notes”). 

The 6.500% Senior Notes were to mature on March 1, 2024 and bear interest at a rate of 6.500% per annum, payable semi-annually 
in arrears on March 1 and September 1 of each year, beginning on September 1, 2016. On March 1, 2021, the Company redeemed 
the 6.500% Senior Notes. 

Redemption of 5.625% Senior Notes and 6.500% Senior Notes 

On January 29, 2021, the Company issued conditional notices of full redemption providing for the redemption in full of $650 

million of 5.625% Senior Notes and $390 million of 6.500% Senior Notes to the holders of such notes.  

On March 1, 2021, the Company satisfied and discharged the indentures governing the 6.500% Senior Notes. In connection 

with the redemption of the 6.500% Senior Notes, the Company 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.   

On March 17, 2021, the Company satisfied and discharged the indentures governing the 5.625% Senior Notes. In connection 

with the redemption of the 5.625% Senior Notes, the Company recorded debt extinguishment costs of $3.3 million, including the 
write-off of deferred financing and premiums costs in the consolidated statement of operations.   

Other long-term debt 

During the year ended December 31, 2021, the Company repaid other long-term debt of $3.3 million, which is reflected in 

repayment of long-term debt within financing activities in the consolidated statement of cash flows. 

Debt Issuance Costs 

Debt issuance costs are deferred and amortized to interest expense over the term of the related debt. Debt issuance costs at 

December 31, 2023 were $10.4 million, net of accumulated amortization of $6.8 million. Debt issuance costs at December 31, 2022 
were $12.6 million, net of accumulated amortization of $4.6 million. Amortization expense related to debt issuance costs, which is 
included in interest expense on the consolidated statements of operations, was $2.2 million, $2.2 million and $2.8 million, 
respectively, for the years ended December 31, 2023, 2022 and 2021. 

Other 

The aggregate maturities of long-term debt at December 31, 2023 were as follows (in thousands): 

2024 
2025 
2026 
2027 
2028 
Thereafter 
Total 

  $

29,219 
39,844 
388,125 
— 
450,000 
475,000 
  $ 1,382,188 

14. Noncontrolling Interests 

Noncontrolling interests in the consolidated financial statements represent the portion of equity held by noncontrolling 
partners in the Company’s non-wholly owned subsidiaries. At December 31, 2023, the Company operated ten facilities through non-
wholly owned subsidiaries. The Company owns between approximately 65% and 87% of the equity interests of these entities and 
noncontrolling partners own the remaining equity interests. The initial value of the noncontrolling interests is based on the fair value 

F-25 

 
 
   
   
   
   
   
 
of contributions. The Company consolidates the operations of each facility based on its status as primary beneficiary, as further 
discussed in Note 15 – Variable Interest Entities. The noncontrolling interests are reflected as redeemable noncontrolling interests 
on the accompanying consolidated balance sheets based on put rights that could require the Company to purchase the noncontrolling 
interests upon the occurrence of a change in control. 

The components of redeemable noncontrolling interests are as follows (in thousands): 

Balance at January 1, 2022 

Contributions from noncontrolling partners in joint ventures 
Net income attributable to noncontrolling interests 
Acquisition of ownership interests from noncontrolling partners 
Distributions to noncontrolling partners in joint ventures 

Balance at December 31, 2022 

Contributions from noncontrolling partners in joint ventures 
Net income attributable to noncontrolling interests 
Distributions to noncontrolling partners in joint ventures 

Balance at December 31, 2023 

  $ 

  $ 

65,388 
21,162 
6,894 
(4,183) 
(1,004) 
88,257 
16,530 
6,006 
(5,107) 
105,686 

15. Variable Interest Entities 

For legal entities where the Company has a financial relationship, the Company evaluates whether it has a variable interest 
and determines if the entity is considered a variable interest entity (“VIE”). If the Company concludes an entity is a VIE and the 
Company is the primary beneficiary, the entity is consolidated. The primary beneficiary analysis is a qualitative analysis based on 
power and benefits. A reporting entity has a controlling financial interest in a VIE and must consolidate the VIE if it has both power 
and benefits. It must have the power to direct the activities that most significantly impact the VIE’s economic performance and the 
obligation to absorb losses of the VIE that potentially could be significant to the VIE or the right to receive benefits from the VIE 
that potentially could be significant to the VIE. 

At December 31, 2023, the Company operated ten facilities through non-wholly owned subsidiaries. The Company owns 

between approximately 65% and 87% of the equity interests of these entities, and noncontrolling partners own the remaining equity 
interests. The Company manages each of these facilities, is responsible for the day to day operations and, therefore, has the power to 
direct the activities that most significantly impact the VIE’s economic performance and the obligation to absorb losses or receive 
benefits from the VIE that could potentially be significant to the VIE. These activities include, but are not limited to, behavioral 
healthcare services, human resource and employment-related decisions, marketing and finance. The terms of the agreements 
governing each of the Company’s VIEs prohibit the Company from using the assets of each VIE to satisfy the obligations of other 
entities. Consolidated assets at December 31, 2023 and 2022 include total assets of variable interest entities of $597.8 million and 
$434.2 million, respectively, which cannot be used to settle the obligations of other entities. Consolidated liabilities at December 31, 
2023 and 2022 include total liabilities of variable interest entities of $27.0 million and $24.4 million, respectively.  

F-26 

 
 
   
   
   
   
   
   
   
   
 
The consolidated VIEs assets and liabilities in the Company’s consolidated balance sheets are shown below (in thousands): 

Cash and cash equivalents 
Accounts receivable, net 
Other current assets 
Total current assets 
Property and equipment, net 
Goodwill 
Intangible assets, net 
Operating lease right-of-use assets 
Total assets 

Accounts payable 
Accrued salaries and benefits 
Current portion of operating lease liabilities 
Other accrued liabilities 
Total current liabilities 
Operating lease liabilities 
Other liabilities 
Total liabilities 

December 31, 

2023 

2022 

  $

  $

  $

  $

55,149    $
34,910     
2,193     
92,252     
438,965     
42,384     
18,295     
5,948     
597,844    $

8,235    $
9,909     
273     
2,385     
20,802     
6,160     
—     
26,962    $

32,478  
23,789  
2,561  
58,828  
313,358  
39,564  
16,139  
6,284  
434,173  

4,650  
6,866  
233  
6,179  
17,928  
6,433  
—  
24,361  

16. Equity 

Preferred Stock 

The Company’s amended and restated certificate of incorporation provides that up to 10,000,000 shares of preferred stock 
may be issued. The board of directors has the authority to issue preferred stock in one or more series and to fix for each series the 
voting powers (full, limited or none), and the designations, preferences and relative participating, optional or other special rights and 
qualifications, limitations or restrictions on the stock and the number of shares constituting any series and the designations of this 
series, without any further vote or action by the stockholders. 

Common Stock 

The Company’s amended and restated certificate of incorporation provides that up to 180,000,000 shares of common stock 

may be issued. Holders of the Company’s common stock are entitled to one vote for each share held of record on all matters on 
which stockholders may vote. There are no preemptive, conversion, redemption or sinking fund provisions applicable to shares of 
the Company’s common stock. In the event of liquidation, dissolution or winding up, holders of the Company’s common stock are 
entitled to share ratably in the assets available for distribution, subject to any prior rights of any holders of preferred stock then 
outstanding. Delaware law prohibits the Company from paying any dividends unless it has capital surplus or net profits available for 
this purpose. In addition, the Credit Facility imposes restrictions on the Company’s ability to pay dividends. 

17. Equity-Based Compensation 

Equity Incentive Plans 

The Company issues stock-based awards, including stock options, restricted stock units and performance stock units, to 
certain officers, employees and non-employee directors under the Acadia Healthcare Company, Inc. Incentive Compensation Plan 
(the “Equity Incentive Plan”). At December 31, 2023, a maximum of 12,700,000 shares of the Company’s common stock were 
authorized for issuance as stock options, restricted stock units and performance stock units or other share-based compensation under 
the Equity Incentive Plan, of which 2,634,774 were available for future grant. Stock options may be granted for terms of up to ten 
years. The Company recognizes expense on all share-based awards on a straight-line basis over the requisite service period of the 
entire award. Grants to employees generally vest in annual increments of 25% each year, commencing one year after the date of 
grant. The exercise prices of stock options are equal to the closing price of the Company’s common stock on the most recent trading 
date prior to the date of grant. 

The Company recognized $32.3 million, $29.6 million and $37.5 million in equity-based compensation expense for the years 
ended December 31, 2023, 2022 and 2021, respectively. Stock compensation expense for the years ended December 31, 2023, 2022 
and 2021 is impacted by forfeiture adjustments and performance stock unit adjustments based on actual performance compared to 

F-27 

 
 
 
 
 
 
 
  
 
   
   
   
   
   
   
   
 
 
 
   
   
   
   
   
   
 
vesting targets. At December 31, 2023, there was $74.0 million of unrecognized compensation expense related to unvested options, 
restricted stock units and performance stock units, which is expected to be recognized over the remaining weighted average vesting 
period of 1.4 years. 

The Company recognized a deferred income tax benefit of $8.8 million, $8.0 million and $9.6 million for the years ended 

December 31, 2023, 2022 and 2021, respectively, related to equity-based compensation expense. 

Stock Options 

Stock option activity during 2021, 2022 and 2023 was as follows: 

Weighted 
Average 
Remaining 
Contractual 
Term (in years)   

Aggregate 
Intrinsic 
Value (in 
thousands) 

Options outstanding at January 1, 2021 
Options granted 
Options exercised 
Options cancelled 
Options outstanding at December 31, 2021 
Options granted 
Options exercised 
Options cancelled 
Options outstanding at December 31, 2022 
Options granted 
Options exercised 
Options cancelled 
Options outstanding at December 31, 2023 
Options exercisable at December 31, 2023 

Number of 
Options 
    1,510,306    $ 
324,320     
(558,322)    
(170,235)    
    1,106,069     
334,260     
(285,577)    
(175,475)    
979,277     
296,340     
(198,527)    
(140,545)    
936,545    $ 
349,080    $ 

Weighted 
Average 
Exercise Price   
37.56   
57.53   
39.45   
40.08   
42.07   
55.73   
40.66   
46.98   
46.27   
78.94   
41.29   
55.95   
56.21     
42.85     

7.26    $ 
5.51    $ 

18,640 
11,155 

Fair values are estimated using the Black-Scholes option pricing model. The following table summarizes the grant-date fair 

value of options and the assumptions used to develop the fair value estimates for options granted during the years ended 
December 31, 2023, 2022 and 2021: 

Weighted average grant-date fair value of options 
Risk-free interest rate 
Expected volatility 
Expected life (in years) 

 $

4.2%  
37%  
5.0 

 $
2.0%   
39%   
5.0 

0.9%
40%
5.0 

Year Ended December 31, 
2022 
 $  20.72 

2023 
30.99 

2021 
20.64 

The Company’s estimate of expected volatility for stock options is based upon the volatility of its stock price over the 

expected life of the award. The risk-free interest rate is the approximate yield on U. S. Treasury Strips having a life equal to the 
expected option life on the date of grant. The expected life is an estimate of the number of years an option will be held before it is 
exercised. 

F-28 

 
 
 
 
  
 
 
   
 
   
 
   
 
 
   
 
   
 
   
 
   
 
   
 
   
 
   
 
   
   
 
 
 
 
 
 
   
   
 
  
  
  
  
  
Other Stock-Based Awards 

Restricted stock unit activity during 2021, 2022 and 2023 was as follows: 

Unvested at January 1, 2021 
Granted 
Cancelled 
Vested 
Unvested at December 31, 2021 
Granted 
Cancelled 
Vested 
Unvested at December 31, 2022 
Granted 
Cancelled 
Vested 
Unvested at December 31, 2023 

Performance stock unit activity during 2021, 2022 and 2023 was as follows: 

Unvested at January 1, 2021 
Granted 
Performance adjustment 
Cancelled 
Vested 
Unvested at December 31, 2021 
Granted 
Performance adjustment 
Cancelled 
Vested 
Unvested at December 31, 2022 
Granted 
Performance adjustment 
Cancelled 
Vested 
Unvested at December 31, 2023 

Weighted 
Average 
Grant-Date 
Fair Value 

Number of 
Shares 
1,022,996    $ 
352,430     
(82,751)    
(366,048)    
926,627    $ 
650,396     
(145,205)    
(386,616)    
1,045,202    $ 
587,239     
(198,740)    
(403,223)    
1,030,478    $ 

Number of 
Units 
1,073,062   $ 
149,416    
465,993    
—    
(184,051)   
1,504,420   $ 
105,311    
182,543    
—    
(518,474)   
1,273,800   $ 
177,509    
407,825    
(114,908)   
(1,408,195)   
336,031   $ 

Weighted 
Average 
Grant-Date 
Fair Value 

28.41 
58.32 
39.63 
30.81 
37.84 
64.65 
49.03 
32.64 
54.89 
76.32 
57.21 
50.48 
68.38 

20.15 
61.52 
25.49 
— 
42.30 
23.20 
73.96 
33.05 
— 
43.16 
20.69 
70.98 
17.69 
69.07 
10.60 
69.35 

Restricted stock unit awards are time-based vesting awards that vest over a period of three or four years and are subject to 
continuing service of the employee or non-employee director over the ratable vesting periods. The fair values of the restricted stock 
unit awards were determined based on the closing price of the Company’s common stock on the trading date immediately prior to 
the grant date. 

Performance stock units are granted to employees and are subject to Company performance compared to pre-established 
targets. In addition to Company performance, these performance-based performance stock units are subject to the continuing service 
of the employee during the three-year period covered by the awards. The performance condition for the performance stock units is 
based on the Company’s achievement of annually established targets for diluted earnings per share. The number of shares issuable 
at the end of the applicable vesting period of performance stock units ranges from 0% to 200% of the targeted units based on the 
Company’s actual performance compared to the targets. 

The fair values of performance stock units were determined based on the closing price of the Company’s common stock on 

the trading date immediately prior to the grant date for units subject to performance conditions. 

F-29 

 
 
 
 
  
 
   
   
   
   
   
   
   
   
   
   
   
   
   
 
 
 
 
  
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 
18. Transaction, legal and other costs 

Transaction, legal and other costs represent costs primarily related to legal, accounting, termination, restructuring, 

management transition, acquisition and other similar costs. Transaction, legal and other costs comprised the following costs for the 
years ended December 31, 2023, 2022 and 2021 (in thousands): 

Legal, accounting and other acquisition-related costs 
Management transition costs 
Termination and restructuring costs 

Year Ended December 31, 
2022 

2021 

2023 
 $  31,335   $
23,283    
7,408    
 $  62,026   $

5,741  $
11,575   $
6,476    
23,792   $

7,435 
— 
5,343 
12,778 

19. Income Taxes 

(Benefit from) provision for income taxes from continuing operations consists of the following for the periods presented (in 

thousands): 

Current: 

Federal 
State 
Foreign 

Total current provision 
Deferred: 
Federal 
State 
Foreign 

Total deferred provision 
(Benefit from) provision for income taxes 

Year Ended December 31, 
2022 

2021 

2023 

  $

  $

68,939    $
14,413     
933     
84,285     

(72,046)    
(22,495)    
557     
(93,984)    
(9,699)   $

63,041    $ 
13,769     
755     
77,565     

9,808     
6,377     
360     
16,545     
94,110    $ 

48,292 
6,715 
778 
55,785 

13,339 
(1,892) 
325 
11,772 
67,557 

A reconciliation of the U.S. federal statutory rate to the effective tax rate is as follows for the periods presented: 

U.S. federal statutory rate on income before income 
   taxed 
Impact of foreign operations 
State income taxes, net of federal tax effect 
Nondeductible expenses and permanent differences 
Change in valuation allowance 
Unrecognized tax benefit 
Federal tax credits 
Noncontrolling interest 
Other 
Effective income tax rate 

Year Ended December 31, 
2022 

2021 

2023 

21.0%  
(2.2)    
45.6 
(30.7)    
(0.1)    
(14.8)    
9.8 
7.4 
2.2 
38.2%  

21.0%  
(0.1)    
4.7 
0.4 
0.2 
— 
(0.6)    
(0.4)    
— 
25.2%  

21.0% 
1.7 
3.9 
2.1 
(2.8) 
(0.9) 
(0.8) 
(0.4) 
0.7 
24.5% 

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. 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. 

F-30 

 
 
 
 
 
 
 
   
   
 
  
  
 
 
 
 
 
 
 
 
  
  
 
 
 
 
 
   
   
   
 
 
 
 
   
   
   
   
 
 
 
 
 
 
 
   
   
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
The domestic and foreign components of (loss) income from continuing operations before income taxes are as follows (in 

thousands): 

Foreign 
Domestic 
(Loss) income from continuing operations before income taxes 

Year Ended December 31, 
2022 

2023 

  $ 

  $ 

5,889    $
(31,249)    
(25,360)   $

5,420    $
368,723     
374,143    $

2021 

5,596 
270,164 
275,760 

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities of the 

Company at December 31, 2023 and December 31, 2022 were as follows (in thousands): 

Deferred tax assets: 

Net operating losses and tax credit 
   carryforwards – federal and state 
Capital loss carryovers 
Bad debt allowance 
Accrued compensation and severance 
Insurance reserves 
Leases 
Accrued expenses 
Accrued Desert Hills settlement 
Interest carryforward 
Lease right-of-use liabilities 
Fixed asset basis difference 
Other assets 

Total gross deferred tax assets 

Less: valuation allowance 
Deferred tax assets 
Deferred tax liabilities: 

Prepaid items 
Accrued expenses 
Intangible assets 
Lease right-of-use assets 
Investment in foreign subsidiary 
Total deferred tax liabilities 
Total net deferred tax asset (liability) 

December 31, 

2023 

2022 

  $

  $

5,729    $
215,175     
1,780     
18,250     
17,343     
948     
1,091     
104,636     
2,430     
29,781     
2,914     
9,130     
409,207     
(217,137)    
192,070     

(4,609)    
—     
(152,284)    
(27,800)    
(2,650)    
(187,343)    
4,727    $

7,333  
215,745  
1,148  
18,784  
20,924  
862  
—  
—  
2,639  
26,277  
2,128  
8,987  
304,827  
(217,705 ) 
87,122  

(3,714 ) 
(5,713 ) 
(139,843 ) 
(24,960 ) 
(2,530 ) 
(176,760 ) 
(89,638 ) 

 The Company records a valuation allowance to reduce its net deferred tax assets to the amount that is more likely than not to 

be realized. At December 31, 2023 and 2022, the Company carried a valuation allowance against deferred tax assets of $217.1 
million and $217.7 million, respectively. These amounts are primarily related to deferred tax assets related to the Company’s capital 
loss carryforward resulting from the U.K. Sale and certain state net operating losses. If the capital loss carryforward is not utilized, it 
will expire in 2026. 

As of December 31, 2023 and 2022, the Company had no federal net operating loss carryforwards. The foreign net operating 

loss carryforwards at December 31, 2023 and 2022 are approximately $0.1 million and $0.1 million, respectively, and have no 
expiration. 

The Company has state net operating loss carryforwards at December 31, 2023 and 2022 of approximately $175.9 million and 

$191.5 million, respectively. These net operating loss carryforwards, if not used to offset future taxable income, will expire from 
2024 to 2036. In addition, the Company has certain state tax credits of $0.2 million which will begin to expire in 2030 if not 
utilized. 

Income taxes receivable was $12.4 million and $28.9 million at December 31, 2023 and 2022, respectively. At December 31, 
2023, the $12.4 million of income taxes receivable is included in other current assets, while at December 31, 2022, $5.8 million of 
income taxes receivable was included in other current assets and $23.1 million was included in other assets in the consolidated 
balance sheets. Income taxes payable of $0.0 million and $1.3 million at December 31, 2023 and 2022, respectively, was included in 
other accrued liabilities in the consolidated balance sheets. 

F-31 

 
 
 
 
 
 
 
  
  
 
   
 
 
 
 
 
 
 
  
 
 
 
   
   
   
   
   
   
   
   
   
   
   
   
   
   
 
 
   
   
   
   
   
   
The Company has recorded liabilities related to unrecognized tax benefits of $4.0 million and $0.0 million at December 31, 
2023 and 2022, respectively. These amounts are inclusive of interest and penalties of $0.9 million and $0.0 million, respectively, 
and are included in other liabilities on the consolidated balance sheets. The amount of unrecognized tax benefit, if realized, that 
would affect the effective tax rate is $3.8 million and $0.0 million at December 31, 2023 and December 31, 2022, respectively. A 
reconciliation of the beginning and ending amount of unrecognized income tax benefits, exclusive of any interest and penalties, is as 
follows (in thousands): 

Balance at January 1 
Additions based on tax positions related to the current year 
Additions for tax positions of prior years 
Reductions as a result of the lapse of applicable 
   statutes of limitations 
Balance at December 31 

2023 

  2022 
—  $  —  $
—    —   
3,089    —   

2021 

2,060 
— 
— 

—    —   
3,089  $  —  $

(2,060) 
— 

$

$

The Company and its subsidiaries file income tax returns in federal and in many state and local jurisdictions as well as foreign 
jurisdictions. The Company may be subject to examination by the Internal Revenue Service (“IRS”) for calendar years 2020 through 
2022. Additionally, any net operating losses that were generated in prior years and utilized in these years may also be subject to 
examination by the IRS. While no foreign jurisdictions are presently under examination, the Company may be subject to 
examination for calendar years 2019 through 2022. Generally, for state tax purposes, the Company’s 2018 through 2022 tax years 
remain open for examination by the tax authorities. At the date of this report, there were no material audits or inquiries that had 
progressed sufficiently to predict their ultimate outcome. 

20. Fair Value Measurements 

The carrying amounts reported for cash and cash equivalents, accounts receivable, other current assets, accounts payable and 

other current liabilities approximate fair value because of the short-term maturity of these instruments. 

The carrying amounts and fair values of the Credit Facility, 5.500% Senior Notes and 5.000% Senior Notes at December 31, 

2023 and 2022 were as follows (in thousands): 

Credit Facility 
5.500% Senior Notes due 2028 
5.000% Senior Notes due 2029 

Carrying Amount 
December 31, 

Fair Value 
December 31, 

2023 
  $  455,880    $
  $  445,539    $
  $  470,348    $

2022 
471,488    $
444,694    $
469,609    $

2023 
455,880    $
436,628    $
451,534    $

2022 
471,488 
422,459 
433,214 

The Credit Facility, 5.500% Senior Notes and 5.000% Senior Notes were categorized as Level 2 in the GAAP fair value 
hierarchy. Fair values were based on trading activity among the Company’s lenders and the average bid and ask price as determined 
using published rates. 

21. Employee Benefit Plans 

The Company maintains a qualified defined contribution 401(k) plan covering substantially all of its employees. The 
Company may, at its discretion, make contributions to the plan. The Company recorded expense of $10.9 million, $6.6 million and 
$2.8 million related to the 401(k) plan for the years ended December 31, 2023, 2022 and 2021, respectively. 

22. U.K. Sale  

On January 19, 2021, the Company completed the U.K. Sale pursuant to a Share Purchase Agreement in which it sold all of 

the securities of AHC-WW Jersey Limited, a private limited liability company incorporated in Jersey and a subsidiary of the 
Company, which constituted the entirety of the Company’s U.K. operations. The U.K. Sale resulted in approximately $1,525 million 
of gross proceeds before deducting the settlement of existing foreign currency hedging liabilities of $85 million based on the current 
British Pounds (“GBP”) to U.S. Dollars (“USD”) exchange rate, cash retained by the buyer and transaction costs. The Company 
used the net proceeds of approximately $1,425 million (excluding cash retained by the buyer) along with cash on the balance sheet 
to reduce debt by $1,640 million during the first quarter of 2021 as described in Note 13 – Long-Term Debt.  

As a result of the U.K. Sale, the Company reported, for all periods presented, results of operations and cash flows of the U.K. 
operations as discontinued operations in the accompanying financial statements. In December 2020, the Company’s U.K. operations 
met the criteria to be classified as assets held for sale. The carrying value of the U.K. operations was written down to fair value less 
costs to sell in the consolidated balance sheet at December 31, 2020. This resulted in a loss on sale of $867.3 million, which 
includes approximately $356.2 million of non-cash goodwill impairment, recorded within discontinued operations in the 

F-32 

 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
  
 
 
 
  
  
  
 
consolidated statement of operations. During the first quarter of 2021, an additional $14.3 million was recorded as a loss on sale 
primarily resulting from an increase in the U.K. operations carrying value.  

For the year ended December 31, 2021, results of operations of the U.K. operations were as follows (in thousands): 

Revenue 
Salaries, wages and benefits 
Professional fees 
Supplies 
Rents and leases 
Other operating expenses 
Depreciation and amortization 
Interest expense, net 
Loss on sale 
Loss on impairment 
Transaction, legal and other costs 
Total expenses 
Loss from discontinued operations before income taxes 
Provision for income taxes 
Loss from discontinued operations 

  $ 

  $ 

62,520 
35,937 
6,815 
2,217 
2,509 
6,682 
— 
10 
13,490 
— 
6,265 
73,925 
(11,405) 
1,236 
(12,641) 

23. Accumulated Other Comprehensive Loss 

The components of accumulated other comprehensive loss are as follows (in thousands): 

Balance at January 1, 2021 

Foreign currency translation gain (loss) 
Gain on derivative instruments, net of tax 
   of $0.1 million 
U.K. Sale 

Balance at December 31, 2021 

Foreign 
Currency 
Translation 
Adjustments    

Change in 
Fair 
Value of 
Derivative 
Instruments    

  $  (373,101)   $  13,686    $
—     

(4,293)    

Pension 
Plan 
(11,950)   $ (371,365) 
(4,260) 

33     

Total 

—     
377,394     
—    $ 

19     
(13,705)    
—    $

—     
11,917     
—    $

19 
375,606 
— 

  $ 

24. Derivatives 

The Company entered into foreign currency forward contracts during the year ended December 31, 2020 in connection with 
certain transfers of cash between the U.S. and U.K. under the Company’s cash management and foreign currency risk management 
programs. Foreign currency forward contracts limit the economic risk of changes in the exchange rate between USD and GBP 
associated with cash transfers. 

In conjunction with the U.K. Sale in January 2021, the Company settled its cross currency swap liability and outstanding 

forward contracts as shown in investing activities on the consolidated statement of cash flows. 

 25. Subsequent Events 

On January 18, 2024, the Company entered into the Second Amendment, which provides for the incurrence of $350 million of 

Incremental Term Loans. Such Incremental Term Loans are structured as an increase of the Term Loan Facility. The maturity date, 
the leverage-based pricing grid, mandatory prepayment events and other terms applicable to the Incremental Term Loans are 
substantially identical to those applicable to the initial $425.0 million term loans incurred under the Term Loan Facility. After 
giving effect to the Incremental Term Loans, the Credit Facility requires quarterly principal repayments for the Term Loan Facility 
of approximately $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. The remaining outstanding 
principal balance of the Term Loan Facility is due on the maturity date of March 17, 2026. 

F-33 

 
 
   
   
   
   
   
   
   
   
   
   
   
   
   
 
 
 
 
  
 
   
   
   
 
On January 19, 2024, pursuant to the terms of the settlement agreements, the Company 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 30, 2024, a lawsuit styled CNRAG, Inc. as Legal Guardian of A.C. v. Garcia et al., No. D-117-CV-2024-00045 

was filed in the District Court alleging similar claims as the previous five lawsuits in the Desert Hills Litigation. The lawsuit has not 
been formally served. The ward in this sixth lawsuit was referenced in prior criminal charges against Garcia five years ago; 
however, prior to this lawsuit, neither the ward nor guardian made contact with the Company about a possible claim. The Company 
determined that a lawsuit from this plaintiff was unlikely because no claims had ever been asserted and the statute of limitations had 
expired. Plaintiff’s allegations assert certain claims, which, if true, may toll the statute of limitations. At this time, the Company is 
not able to quantify the ultimate liability, if any, in connection with this lawsuit. No additional victims are referenced in the prior 
criminal charges against Garcia.  

In July 2023, the Company 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. The transaction closed on February 22, 2024. 

F-34 

 
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Executive Officers and Board of Directors

Reeve B. Waud
Chairman;
Founder and Managing Partner, 
Waud Capital Partners

Christopher H. Hunter
Chief Executive Officer and Director

Heather Dixon
Chief Financial Officer

Brian P. Farley
Executive Vice President, General Counsel 
and Secretary

John S. Hollinsworth
Executive Vice President of Operations

Jason R. Bernhard
Director;
Managing Director, Lazard 

E. Perot Bissell
Director;
Managing Partner, Egis Capital Partners, LLC

Michael J. Fucci
Director;
Retired Executive Chairman of Deloitte U.S.

Corporate Information
Corporate Office
Acadia Healthcare Company, Inc.
6100 Tower Circle, Suite 1000
Franklin, TN 37067
(615) 861-6000
www.acadiahealthcare.com

Registrar and Transfer Agent
Broadridge Corporate Issuer Solutions, Inc.
51 Mercedes Way
Edgewood, NY 11717
(631) 254-7400

Independent Auditors
Ernst & Young LLP
Nashville, TN

Vicky B. Gregg
Director;
Co-Founder and Partner, Guidon Partners

William F. Grieco
Director;
Vice President and Chief Compliance Officer,
NX Development Corporation
Managing Director, Arcadia Strategies, LLC

Patrice A. Harris, M.D.
Director;
Co-Founder and Chief Executive Officer,
eMed Digital Healthcare

R. David Kelly
Director;
Founder and Managing Partner,
StraightLine Realty Partners

Wade D. Miquelon
Director;
Founder and Partner in Playmore Holdings, LLC

Debra K. Osteen
Director;
Retired Chief Executive Officer, 
Acadia Healthcare Company, Inc.

Form 10-K/Investor Contact
A copy of the Acadia Healthcare Company, Inc. 
Annual Report on Form 10-K for fiscal year 
2023 filed with the Securities and Exchange 
Commission is available on the Company’s 
website at www.acadiahealthcare.com. It is also 
available (without exhibits) from the Company 
at no charge. These requests and other investor 
contacts should be directed to Patrick Feeley, 
Senior Vice President, Investor Relations at the 
Company’s corporate office.

Annual Meeting
The annual meeting of stockholders will be  
held on Thursday, May 23, 2024, at 9:00 a.m. (CDT) 
at the Company’s corporate offices at 6100 Tower 
Circle, Suite 1000, Franklin, TN.

38574 Acadia Healthcare-PROD.indd   4
38574 Acadia Healthcare-PROD.indd   4

4/3/24   2:20 PM
4/3/24   2:20 PM

Acadia Healthcare Company, Inc.
6100 Tower Circle, Suite 1000
Franklin, TN 37067
615.861.6000

www.acadiahealthcare.com