SecProbe.io

CORRESP
1
filename1.htm

CORRESP

 December 6, 2024

VIA EDGAR

 Tayyaba Shafique

Tracey Houser

 Division of Corporation Finance

Office of Industrial Applications and Services

 United States
Securities and Exchange Commission

 100 F Street, NE

Washington, D.C. 20549

Re:
 Acadia Healthcare Company, Inc.

Form 10-K for Fiscal Year Ended December 31, 2023

10-K filed February 28, 2024

Form 8-K Filed February 27, 2024

File No. 001-35331

Ladies and Gentlemen:

 This letter sets forth
the responses of Acadia Healthcare Company, Inc. (the “Company”) to the comments of the Staff (the “Staff”) of the U.S. Securities and Exchange Commission set forth in your letter, dated
November 15, 2024, with respect to the Company’s Form 10-K for the fiscal year ended December 31, 2023, filed on February 27, 2024 (File
No. 001-35331), and Form 8-K, filed on February 27, 2024 (File No. 001-35331).

For your convenience, each of the above referenced comments of the Staff is reprinted in bold, italicized text below, followed by the
Company’s responses thereto.

 Tayyaba Shafique

Tracey Houser

 U.S. Securities & Exchange Commission

December 6, 2024

  Page
 2

 Form 10-K for Fiscal Year Ended December 31, 2023

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

Results of Operations, page 37

1.
 We note your presentation of Adjusted EBITDA margin change and Adjusted EBITDA margin excluding income
from provider relief fund, which appear to be non-GAAP performance measures. Please expand your disclosures to fully comply with the disclosure requirements in Item 10(e)(1)(i) of Regulation S-K.

 RESPONSE:

The Company acknowledges the Staff’s comment and respectfully advises the Staff that, beginning with its Annual Report on Form 10-K for the fiscal year ending December 31, 2024, it will no longer present Adjusted EBITDA margin change and Adjusted EBITDA margin excluding income from provider relief fund in its results of operations in
future periodic reports. To the extent the Company discloses such metrics in other materials in the future, it will comply with Item 10(e) and Regulation G, as applicable.

11: Commitments and Contingencies, page F-21

2.
 We note your disclosures for Securities Litigation and Derivative Actions. Please expand your disclosures
to state the amount or range of reasonably possible loss in the aggregate, or that you are unable to reasonably estimate the amount or range. Please note that ASC 450-20-50-4 does not require the amount or range of reasonably possible loss to be estimated with precision or certainty.

RESPONSE:

 The Company
acknowledges the Staff’s comment and respectfully advises the Staff that it is unable to reasonably estimate the amount or range of reasonably possible loss in the aggregate at this time. In response to the Staff’s comment, the Company
will explicitly state in future filings, if applicable, that such estimates cannot be made with respect to the Securities Litigation and Derivative Actions until such time as the Company can reasonably estimate the extent of the loss. The Company
will also provide the amount or range of reasonably possible loss, or explicitly state that such estimates cannot be made until such time as the Company can reasonably estimate the extent of the loss, with respect to other pending litigation.

 Tayyaba Shafique

Tracey Houser

 U.S. Securities & Exchange Commission

December 6, 2024

  Page
 3

 Form 8-K Filed February 27, 2024

Exhibit 99

3.
 We note your presentation of the change in Adjusted EBITDA within the Fourth Quarter Highlights section
and also your presentation of Adjusted EBITDA margin and Adjusted EBITDA margin excluding income from provider relief fund without also presenting with equal or greater prominence the change in the most comparable US GAAP measure. Please revise
these presentations to comply with the guidance in Item 10(e)(1)(i)(A) of Regulation S-K and Question 102.10(a) of the Compliance and Disclosure Interpretations for
Non-GAAP Financial Measures.

 RESPONSE:

The Company acknowledges the Staff’s comment and respectfully advises the Staff that, beginning with its next earnings release, which will
be for the fiscal year ending December 31, 2024, it will modify the disclosure to comply with the prominence requirements of Item 10(e)(1)(i)(A) of Regulation S-K and Question 102.10 of the
Compliance and Disclosure Interpretations for Non-GAAP Financial Measures as requested by the Staff. The Company advises the Staff that such disclosure will be presented similarly to the below (responsive
changes italicized), and similarly to the disclosure contained in Annex A, Annex B and Annex C:

Third Quarter Highlights

•

 Revenue totaled $815.6 million, an increase of 8.7% over the third quarter of 2023

•

 Same facility revenue increased 8.6% compared with the third quarter of 2023, including an increase in revenue
per patient day of 3.6% and an increase in patient days of 4.7%

•

 Net income attributable to Acadia totaled $68.1 million, an increase of 131.3% over the third quarter of
2023, or $0.74 per diluted share

•

 Adjusted income attributable to Acadia totaled $84.1 million, an increase of 0.3% over the third quarter
of 2023, or $0.91 per diluted share

•

 Adjusted EBITDA totaled $194.3 million, an increase of 10.5% over the third quarter of 2023

•

 Profit margin increased to 8.4% compared to -29.6% for the third
quarter of 2023, while same facility profit margin decreased to 18.9% compared to 19.0% for the third quarter of 2023

•

 Same facility adjusted EBITDA margin increased to 29.7% compared to 29.3% for the third quarter of 2023

 Tayyaba Shafique

Tracey Houser

 U.S. Securities & Exchange Commission

December 6, 2024

  Page
 4

4.
 We note your presentation of a net leverage ratio using Adjusted EBITDA as the denominator without also
presenting with equal or greater prominence the calculation of net leverage ratio using the most comparable US GAAP measure. Please revise this presentation to comply with the guidance in Item 10(e)(1)(i)(A) of Regulation SK and Question
102.10(a) of the Compliance and Disclosure Interpretations for Non-GAAP Financial Measures.

RESPONSE:

 The Company
acknowledges the Staff’s comment and respectfully advises the Staff that, historically, the Company has presented its net leverage ratio in its earnings releases not because the Company views it as a performance measure, but because the Company
believes the measure is material to investors’ understanding of the Company’s financial condition and liquidity. Accordingly, beginning with the Company’s next earnings release, which will be for the fiscal year ending
December 31, 2024, it will no longer present net leverage ratio in its earnings releases. Instead, the Company advises the Staff that, beginning with its Annual Report on Form 10-K for the fiscal year
ending December 31, 2024, the Company will present its consolidated total net leverage ratio (as defined in the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30,
2024 (the “Q3 10-Q”)) in the “Liquidity and Capital Resources” section of its Management’s Discussion and Analysis of Financial Condition and Results of Operations in its future Annual
Reports on Form 10-K and Quarterly Reports on Form 10-Q. The Company will be providing this information in furtherance of its compliance with Item 303(b)(1) of
Regulation S-K, which requires registrants to “identify any known trends or any known demands, commitments, events or uncertainties that will result in or that are reasonably likely to result in the
registrant’s liquidity increasing or decreasing in any material way.”

 The Company further respectfully directs the Staff’s
attention to Question 102.09 of the Staff’s Compliance & Disclosure Interpretations regarding Non-GAAP Financial Measures (“Question 102.09”), in which the Staff makes
clear that, notwithstanding the prohibitions set forth in Item 10(e) of Regulation S-K, if a registrant believes that (a) a credit agreement is a material agreement, (b) a covenant thereunder is a
material term of the credit agreement and (c) information about such covenant is material to an investor’s understanding of the registrant’s financial condition and/or liquidity, then the registrant may in fact “be required
to disclose the measure as calculated by the debt covenant as part of its MD&A.” (emphasis added) As demonstrated by the disclosure on page 27 of the Q3 10-Q, each of the foregoing conditions has
been met, which compels the disclosure of the measure.

 Importantly, both Regulation G and Item 10(e) of Regulation S-K specifically exclude from the definition of “non-GAAP financial measure” any measure that is “required to be disclosed by … Commission rules.” In
light of the guidance reflected in Question 102.09 and the disclosure framework set forth in Item 303(b)(1) of Regulation S-K, we respectfully submit that disclosure of total consolidated net leverage ratio is
a required element of the Company’s periodic reports. Accordingly, total consolidated net leverage ratio is not, by definition, a “non-

 Tayyaba Shafique

Tracey Houser

 U.S. Securities & Exchange Commission

December 6, 2024

  Page
 5

GAAP financial measure”, and the Company’s future disclosure of total consolidated net leverage ratio in the “Liquidity and Capital Resources” section of its Management’s
Discussion and Analysis of Financial Condition and Results of Operations should not be subject to the general prohibitions and requirements related to non-GAAP financial measures set forth in Regulation G and
Item 10(e) of Regulation S-K.

 Notwithstanding the foregoing, the Company advises the Staff that
it will provide enhanced disclosures relating to total consolidated net leverage ratio in future periodic reports to make clear that total consolidated net leverage ratio is being reported as calculated under the Credit Facility (as defined in the
Q3 10-Q) and not pursuant to GAAP and to refer to the agreements governing the Credit Facility attached as exhibits to the Company’s periodic reports for further information related to the calculations
thereof.

5.
 Please tell us and expand your disclosures for the transaction, legal and other costs adjustment to your
various non-GAAP performance measures to clearly explain and quantify each component.

RESPONSE:

 The Company
acknowledges the Staff’s comment and respectfully advises the Staff that transaction, legal and other costs has historically represented a composite of three individual categories: (1) legal, accounting and other acquisition-related costs;
(2) management transition costs; and (3) termination and restructuring costs. The Company advises the Staff that, beginning with its next earnings release, which will be for the fiscal year ending December 31, 2024, it will include
disclosure explaining and quantifying each component of transaction, legal and other costs, including a conformed version of the table below, which the Company included in its Form 10-Q for the fiscal quarter
ended September 30, 2024 (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

2024

2023

2024

2023

 Legal, accounting and other acquisition-related costs

$
6,041

$
4,196

$
15,365

$
6,761

 Management transition costs

1,490

3,615

3,085

14,590

 Termination and restructuring costs

718

3,436

(1,263
)

5,441

$
8,249

$
11,247

$
17,187

$
26,792

 * * * *

 Tayyaba Shafique

Tracey Houser

 U.S. Securities & Exchange Commission

December 6, 2024

  Page
 6

 Please contact Matthew Pacey of Kirkland & Ellis LLP at (713) 836-3786 or Heather Dixon of the Company at (615) 861-6000 with any questions or further comments regarding the responses to the Staff’s comments.

Very truly yours,

ACADIA HEALTHCARE COMPANY, INC.

 /s/ Heather Dixon

Name:

Heather Dixon

Title:

Chief Financial Officer

cc:
 Christopher H. Hunter, Acadia Healthcare Company, Inc.

Brian Farley, Acadia Healthcare Company, Inc.

Matthew R. Pacey, P.C., Kirkland & Ellis LLP

Ieuan A. List, Kirkland & Ellis LLP

 ANNEX A

(Responsive changes italicized)

Acadia Healthcare Company, Inc.

Operating Statistics

(Unaudited, Revenue in thousands)

Three Months Ended
September 30,

Nine Months Ended
September 30,

2024

2023

%
Change

2024

2023

%
Change

 Same Facility Results (1)

 Revenue

$
802,555

$
739,335

8.6
%

$
2,334,956

$
2,148,408

8.7
%

 Patient Days

800,880

764,703

4.7
%

2,332,369

2,260,513

3.2
%

 Admissions

50,368

49,397

2.0
%

147,617

147,130

0.3
%

 Average Length of Stay (2)

15.9

15.5

2.7
%

15.8

15.4

2.8
%

 Revenue per Patient Day

$
1,002

$
967

3.6
%

$
1,001

$
950

5.3
%

 Profit margin (3)

18.9
%

19.0
%

-10 bps

19.1
%

18.6
%

50 bps

 Adjusted EBITDA margin (3)

29.7
%

29.3
%

40 bps

29.3
%

28.8
%

50 bps

 Profit margin excluding income from provider relief fund

18.9
%

18.4
%

50 bps

19.1
%

18.4
%

70 bps

 Adjusted EBITDA margin excluding income from provider relief fund

29.7
%

28.7
%

100 bps

29.3
%

28.6
%

70 bps

 Facility Results

 Revenue

$
815,634

$
750,334

8.7
%

$
2,379,725

$
2,185,938

8.9
%

 Patient Days

815,126

779,296

4.6
%

2,375,477

2,306,109

3.0
%

 Admissions

51,513

50,302

2.4
%

151,082

150,237

0.6
%

 Average Length of Stay (2)

15.8

15.5

2.1
%

15.7

15.3

2.4
%

 Revenue per Patient Day

$
1,001

$
963

3.9
%

$
1,002

$
948

5.7
%

 Profit margin (3)

16.7
%

18.5
%

-180 bps

17.6
%

17.6
%

0 bps

 Adjusted EBITDA margin (3)

28.2
%

28.7
%

-50 bps

27.9
%

28.0
%

-10 bps

 Profit margin excluding income from provider relief fund

16.7
%

17.9
%

-120 bps

17.6
%

17.4
%

20 bps

 Adjusted EBITDA margin excluding income from provider relief fund

28.2
%

28.1
%

10 bps

27.9
%

27.8
%

10 bps

(1)
 Same facility results for the periods presented include facilities we have operated for more than one year and
exclude certain closed services.

(2)
 Average length of stay is defined as patient days divided by admissions.

(3)
 For each of the three and nine months ended September 30, 2023, includes income from provider relief fund
of $4.4 million.

 ANNEX B

(Responsive changes italicized)

Three Months Ended
September 30,

Nine Months Ended
September 30,

2024

2023

2024

2023

(in thousands)

 Net income (loss) attributable to Acadia Healthcare Company, Inc.

$
68,132

$
(217,710
)

$
222,997

$
(79,396
)

 Net income attributable to noncontrolling interests

3,236

2,185

7,958

3,978

 Provision for (benefit from) income taxes

27,199

(71,873
)

72,916

(29,907
)

 Interest expense, net

29,924

20,742

86,297

61,651

 Depreciation and amortization

37,641

33,388

110,054

96,969

 EBITDA

166,132

(233,268
)

500,222

53,295

 Adjustments:

 Equity-based compensation expense (a)

9,467

8,163

27,014

23,140

 Transaction, legal and other costs (b)

8,249

11,247

17,187

26,792

 Legal settlements expense (c)

— 

394,181

— 

394,181

 Loss on impairment (d)

10,459

— 

11,459

8,694

 Adjusted EBITDA

$
194,307

$
180,323

$
555,882

$
506,102

 Adjusted EBITDA margin

23.8
%

24.0
%

23.4
%

23.2
%

 Profit margin

8.4
%

(29.0
)%

9.4
%

(3.6
)%

 Income from provider relief fund

— 

(4,442
)

— 

(4,442
)

 Adjusted EBITDA excluding income from provider relief fund

$
194,307

$
175,881

$
555,882

$
501,660

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

$
68,132

$
(222,152
)

$
222,997

$
(83,838
)

 Adjusted EBITDA margin excluding income from provider relief fund

23.8
%

23.4
%

23.4
%

22.9
%

 Profit margin excluding income from provider relief fund

8.4
%

(29.6
)%

9.4
%

(3.8
)%

 ANNEX C

Acadia Healthcare Company, Inc.

Reconciliation of Net Income Attributable to Acadia Healthcare Company, Inc. to Adjusted EBITDA

(Unaudited)

Three Months Ended September 30, 2024

Three Months Ended September 30,