Good day, and welcome to Acadia Healthcare’s First Quarter of 2025 Earnings Call. All participants will be in a listen-only mode for the duration of the call. After today’s presentation, there will be an opportunity to ask questions. Also, please be aware that today's call is being recorded. I would now like to turn the call over to Brian Farley, General Counsel. Please go ahead.

Thank you and good morning. Yesterday, after the market closed, we issued a press release announcing our first quarter 2025 financial results. This press release can be found in the Investor Relations section of the acadiahealthcare.com website. Here with me today to discuss the results are Chris Hunter, Chief Executive Officer and Heather Dixon, Chief Financial Officer. To the extent any non-GAAP financial measure is discussed in today's call, you will find in the press release that is posted on our website a reconciliation of that measure to the most directly comparable financial measure calculated according to GAAP. This conference call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements, among others, regarding Acadia's expected quarterly and annual financial performance for 2025 and beyond. These statements may be affected by the important factors, among others, set forth in Acadia's filings with the Securities and Exchange Commission and in the company's first quarter news release and consequently, actual operations and results may differ materially from the results discussed in the forward-looking statements. At this time, I would like to turn the conference call over to Chris.

Thank you, Brian, and good morning, everyone. Thank you for being with us for Acadia's first quarter 2025 conference call. We are pleased with our start to 2025 with both first quarter revenue and EBITDA landing in line with our expectations, while we made continued progress against our strategic growth initiatives. First quarter revenue of $770.5 million came in just above the midpoint of our outlook range of $765 million to $775 million, while adjusted EBITDA of $134.2 million was near the high end of our outlook range of $130 million to $235 million. We also reaffirmed our previously issued full-year financial guidance ranges for both revenue and adjusted EBITDA, which Heather will provide further detail on later in the call. Moving to volumes, same facility patient days grew 2.2% in the first quarter, which included an unfavorable leap year impact of roughly 110 basis points over the first quarter of 2025. The strong relationships we've built with our referral sources and our 21 joint venture partners continue to be an important part of our strategy for success. Acadia continues to be the preferred partner for leading health systems with both local and national brand recognition across the country to better serve patients by bridging the gap between physical and behavioral healthcare. Along those lines, I'd like to provide a progress update on our strategic initiatives. In the first quarter, we added 378 new beds, comprised of 90 beds to existing facilities and 288 beds from two new facilities that were opened in the quarter, which includes a joint venture hospital in partnership with Henry Ford Health in West Bloomfield, Michigan and a de novo facility in Northport, Florida. In addition, Acadia added seven new comprehensive treatment centers in the first quarter, extending the company's market reach to 170 CTCs across 33 states. For the full year 2025, we expect to add between 800 and 1,000 total beds. Looking forward, we have a solid pipeline of potential opportunities in attractive markets and expect to add between 600 and 800 beds annually over 2026 to 2028. Before I turn the call over to Heather, I would like to spend a few minutes discussing the numerous efforts this company continues undertaking to support our quality initiatives and share a few thoughts on the policy landscape. At Acadia, our commitment to quality and safety is a foundational element of our strategy. Our facilities are licensed, accredited and regularly inspected to uphold high regulatory and quality standards, including rigorous requirements for employee training and patient safety. We employ a multilayered approach to patient protection that often exceeds industry and regulatory standards. These measures, such as 24/7 patient monitoring systems, mandatory de-escalation training and regular safety rounds, are designed to meet the specific needs of the patients and staff at each Acadia facility. Our ability to use data has continued to advance significantly. Our hospital CEOs and leadership teams also use a variety of sophisticated cloud-based systems with deep data capabilities to monitor care quality. Further, our integrated quality dashboard now provides real-time visibility into over 50 distinct safety, patient experience and regulatory compliance-related key performance indicators. At the corporate level, our team supports this work with weekly, monthly and quarterly operational and quality performance reviews. We believe the supportive multidisciplinary relationship between the field and the corporate teams ensures we find and eliminate sources of operational and clinical variation and helps us translate behavioral science to practice with consistency. Behavioral health is complex, but it is clear that the need has never been greater for high-quality behavioral healthcare given the severe mental health crisis that our nation faces. Our strategy at Acadia remains centered on high-quality care and clinical health outcomes, and we will continue to prioritize our quality initiatives and expand them when necessary. Turning to labor, we believe our differentiated quality initiatives are having a positive impact on our ability to recruit and retain our staff. These efforts are directly connected to our emphasis on employee engagement and talent acquisition, ensuring we have appropriately staffed facilities with trained employees, which have improved underlying labor trends for our company. This is further reinforced by our premium pay, which declined on both a sequential and year-over-year basis in the first quarter. We are extremely proud of the commitment of Acadia's nearly 26,000 employees that have chosen to join our mission to provide compassionate care that improves the lives of patients and their families. Now I would like to briefly touch on the policy landscape. First, let me say that we believe government policy has an important role to play in continuing to strengthen the behavioral healthcare system, and we remain highly engaged on the policy front, so that we can continue advocating strongly on behalf of patients in need. While the situation in Washington is fluid, we believe that the essential care we provide to underserved and vulnerable patient populations will continue to be recognized and supported. To cite one example, supplemental payment programs have been a key enabling force behind not only our ability to serve high acuity behavioral health patients, but also patients in many other essential parts of the healthcare system, including rural hospitals, children's hospitals and nursing homes. With this in mind, we expect these programs to remain an important funding mechanism for Medicaid populations. We remain focused on providing programs and facilities that provide these patients with the best possible care and will provide updates to the investment community as we receive clarity on any potential policy-related impacts to our business. With that, I would now like to turn the call over to Heather to discuss our financial results for the quarter.

Thanks, Chris, and good morning, everyone. Our first quarter financial performance for both revenue and adjusted EBITDA fell within our guidance ranges, with adjusted EBITDA performing at the high end of the range. We reported $770.5 million in revenue for the quarter, representing a slight increase over the first quarter of last year. Recall, we had expected Medicaid supplemental payments to be down $10 million to $15 million year over year in Q1, and these came in near the midpoint of that range. Same facility revenue grew 2.1% compared with the first quarter of 2024, driven by patient day growth of 2.2%. As Chris mentioned, both same facility revenue and patient day growth included an unfavorable impact of approximately 110 basis points from the leap year. Q1 same facility revenue per patient day growth was roughly flat on a year-on-year basis, primarily due to the timing of supplemental payments. Adjusted EBITDA for the first quarter of 2025 was $134.2 million, reflecting an adjusted EBITDA margin of 17.4%. As reflected in our prior guidance, these quarterly results included an approximate $5 million year-over-year EBITDA impact due to the decision to close the facility in the first quarter as part of our ongoing portfolio management efforts. Also included in our results were startup losses related to new facilities, which were higher on both a year-over-year basis and a sequential basis, reflecting a step-up in the number of newly constructed facilities. On a same facility basis, adjusted EBITDA was $191.6 million and adjusted EBITDA margin was 25.2% in the first quarter of this year. Our same facility results continued to be affected by a small group of underperforming facilities that you will recall started to have a material impact on our results near the end of the third quarter of 2024. To date, these facilities have performed in line with our expectations. While we continue to work diligently to improve performance at these facilities, we acknowledge that it will take time, and our 2025 guidance continues to reflect no material improvement at these underperforming facilities as we move throughout the year. We continue to maintain a strong financial position, providing us the ability to make the right strategic investments to enhance our operations and support our growth strategy. As of March 31, 2025, we had $91.2 million in cash and cash equivalents and approximately $900 million under our $1 billion revolving credit facility with a net leverage ratio of approximately 3.2 times. The company repurchased approximately 1.6 million shares during the first quarter for a total of $47.3 million. Moving on to our outlook for 2025. As noted in our press release, we are reaffirming our full year guidance ranges for revenue, adjusted EBITDA and adjusted earnings per share. As a reminder, our 2025 guidance includes the following considerations. For 2025, we expect to add between 800 and 1,000 total beds. As I just mentioned, we expected that a small subset of underperforming facilities would result in an approximate $20 million year-over-year headwind to our 2025 adjusted EBITDA. As I mentioned, to date, these facilities have performed in line with our expectations and negatively impacted our same facility patient day growth by approximately 90 basis points in the first quarter. We expect to begin to comp over this headwind to volumes in the fourth quarter of 2025. We continue to expect Medicaid supplemental payments to be flat to up $15 million in 2025 on a net basis, inclusive of the new Tennessee program once approved. We continue to expect $50 million to $55 million in start-up losses for the full year 2025, of which we anticipate approximately $15 million in the second quarter. Before we move to Q&A, I would like to offer some additional color on our bed additions and growth plan. Since last quarter, some of you have asked us questions about our long-term EBITDA growth guidance. So, we want to take a moment to clarify some of the assumptions that are contemplated in that guidance range. The previously announced expected revenue growth of 7% to 9% and EBITDA growth of 8% to 10% over 2026 to 2028 is underpinned by annual bed additions of 600 beds to 800 beds beginning in 2026, as well as the roughly 1,600 to 1,800 beds being added over 2024 and 2025. First, we want to highlight that most of these bed additions come in the form of brand-new facilities, which on average typically ramp to run rate occupancy and EBITDA margin within a five-year period. As a result, we expect to recognize incremental EBITDA for the majority of this cohort beyond 2028 as these beds continue to ramp to mature occupancy and margin levels. Keep in mind, our three-year outlook also contemplates the inherent uncertainty that always exists with regards to construction timing, licensing timing and time to ramp. And we will remain cognizant of this uncertainty as we continue to execute on the largest expansion of bed capacity in our company's history over the next several years. Accordingly, our three-year outlook assumes that the occupancy and EBITDA ramp for new hospitals will trend towards a five-year ramp period, which is at the upper end of our historical ramp model and leads to a significant amount of inherent earnings power beyond 2028. Second, with regard to payer rates, we included an element of conservatism in our assumptions as it relates to revenue per patient day and rate growth, given some of the uncertainties surrounding the policy and macro environment. We see embedded upside in these projections if the next few years' updates from government and commercial payers more closely resemble that of the last few years versus what is currently contemplated in our three-year outlook. This base of new behavioral health hospitals we are currently building will provide a multi-year runway for growth, not only as occupancy ramps over the next few years, but also as we're able to add expansion beds to these facilities over time. As we decrease the accelerated pace of bed additions in 2026 to a rate of 600 to 800 per year, we expect startup losses to ease in the back half of 2026, helping to fuel strong and self-sustaining free cash flow generation as we exit 2026. Note this debt growth is still well above the historical pace prior to 2024, which will contribute meaningfully to our performance in the outer years, including in 2028 and beyond. With that, we're ready to open the call for questions.

Hi, everybody. Just maybe first, there are a lot of moving parts in this year's numbers. I know you got the supplemental timing on different supplemental payment programs. You got the pacing of startup losses on the bed additions, and then the annualizing of the Q4 challenges from last year start to make the comps easier later in the year. Can you just give us some perspective on how you see the progression of EBITDA from here, maybe a little bit more color on how to think about the seasonality of the business this year, given some of those dynamics?

Yes, good morning, A.J. Thank you for the question. I'll go over the phasing a bit. When we compare Q1 to the rest of the year, you’re correct that there are several factors at play, and we've previously mentioned a few that will have a more significant impact on Q1. If you take those into account or adjust for them, you can see the usual rhythm that we would expect. Firstly, there hasn't been any change since our last discussion regarding our guidance and the various factors we laid out. The most notable item is that, in terms of timing, the Tennessee DPP will be the biggest variable affecting our performance throughout the year, depending on which quarter it gets recorded in. Additionally, there are a few other elements that will contribute to improved EBITDA as the year progresses. For one, Q1 had the highest startup costs and the lowest contribution from the new beds due to the timing of when they were added, indicating a sharper increase as we move through the year. Moreover, as we anticipated in our guidance, supplemental payments were down year-over-year in Q1, which we expected to decrease by $10 million to $15 million, and we ended up right in the middle of that range for Q1. However, we expect those supplemental payments to be stable or potentially increase by up to $15 million for the full year, representing a significant shift from Q1 to the rest of the year. As I mentioned, Tennessee plays a major role in that change. Regarding other factors affecting volume, we anticipate a growing contribution from new beds as the year rolls on. Furthermore, we will be comparing against challenges we experienced in some underperforming facilities from last year's fourth quarter, which will make comps easier. One more point to note is about rates. The timing of supplemental payments and shifts in Medicaid mix in the specialty business affected Q1, but those factors should start to stabilize as we enter Q2 and continue throughout the year. Consequently, we expect low single-digit rate growth for the full year, which should reflect as we progress, in contrast to Q1 where it was slightly down. I believe that summarizes the key points. I've highlighted several moving parts for our full-year EBITDA guidance during our year-end call, but these are the main aspects to consider, and I hope this provides some clarity.

Yes, that's very helpful. Maybe just my follow-up question is, I know you've got a cautious view on rates this year, but technically, what are you actually seeing in your Medicaid rate updates? I assume a lot of states updated January 1, and you'll have some more update July 1. And then you probably also got your Medicare rate, update, which we pretty much know, but if there's any variance there for you specifically. And then any comment on commercial, and what you're seeing there.

AJ, this is Chris. I'll go ahead and take that one. I would just say overall that we continue to have very good discussions with our payer partners, and we remain very optimistic that they're going to continue to recognize our focus on providing high-quality care. I wouldn't call anything out with respect to Medicaid versus commercial or Medicare. Our outlook, as Heather has discussed, always assumed a low single-digit same facility revenue per day growth. And historically, we've talked about that in kind of a low to mid-single digit range. We decided, just given the noise on the policy front, that it was prudent to just incorporate a more conservative approach in our thinking about rates, just given the broader environment. But there's nothing specific on the horizon that we see is concerning, and I would say underlying rate growth has been relatively stable and in line with our expectation as we've gotten into the year.

Hey, good morning, guys. Chris, maybe take a step back. As I think about obviously 2% same store volume performance in the quarter, despite some of the headwinds you're facing with the units that are dealing with the headlines. How are you thinking about what the broader demand environment looks like right now? I mean, obviously you're one of our data points and your peer that's public. But outside of that, if you can share with us what the demand environment looks like for behavioral health today?

Yeah, I would say, Brian, thanks for the question, that our expectation is that it just continues to be consistent with what we're seeing. I mean, I think, particularly given our strategy of focusing on the higher acuity patients, when you look across our various lines of business, whether it's on the acute front, CTC, specialty RTC, we just continue to see increasing demand. And I think we've done a very good job of pointing out our commitment to quality. We have obviously invested heavily in being able to quantify outcomes, and we've shared that with our payer partners. And I think all of that has led to a consistent demand environment. I mean, Heather, anything that you would want to add?

No, I think that's right. I think the demand environment remains, and we are doing our part to meet that demand, and we're working hard to look at new facilities and bed additions where those are necessary. So, nothing to add there.

I appreciate that. And maybe Heather, thank you for all the color on the five-year ramp to maturity. So, just curious, as you think about the cohort of beds added in '24 and '25, maybe even into '26, has your view on the path to breakeven changed? Or is it still the same kind of laying out that five-year kind of like ramp up to kind of like mature levels of margins and occupancy?

Thank you for your question. Our perspective remains unchanged. I'd like to elaborate on our thinking, particularly regarding our long-term projections for the next three years. You highlighted the historical ramp-up period of three to five years, which is indeed our average. It's important to consider that various factors affect these ramps. We've had notable success in recent facilities during this process. A significant factor influencing ramp times is whether we are adding beds to existing facilities or constructing new beds, as the latter naturally requires more time to ramp up. In our longer-term projections, we've anticipated a greater proportion of new facilities and new beds as opposed to what we've seen in recent years. This leads us to lean towards the higher end of the three to five-year range, particularly for those newly constructed facilities. Consequently, this means there will be additional EBITDA growth beyond 2028 because the new beds will continue to ramp up and reach their peak performance after that year. We also need to acknowledge the uncertainties associated with construction timelines, licensing processes, and ramp-up durations. We are very mindful of these uncertainties as we carry out what is the largest expansion the company has seen in years, and we plan to continue this strategy. It's essential for us to incorporate this uncertainty into our projections. Looking four years ahead, we expect to see the effects of our efforts, which means the EBITDA growth projected at the end of the timeline includes considerations for the beds that have not yet begun construction. Therefore, it seems more reasonable to adopt the higher end of the ramp-up period estimate because it projects further into the future. I've mentioned before that this reflects a level of conservatism in our approach. Overall, we're still seeing strong performance. For instance, we have a recent cohort from 2023 that we are closely monitoring due to its current position and ramp up, and the outcomes have been promising. Nevertheless, we believe it’s prudent to lean towards the higher end of the ramp period estimates as I have discussed. To summarize, while our view has not changed, we've incorporated some conservatism into our projections, and I hope this clarifies our rationale and decision-making.

Hey, thanks. Anything when you just look at the first quarter and your performance, was there anything better or worse in the quarter versus your original expectations? Just wondering if there was any favorability on any of the key assumptions or expense items.

Thanks, Whit. Sure, let me discuss two things. First, I would mention labor. We have seen a continuation of favorable labor trends, and our base wage inflation has continued to decrease. Additionally, both contract and premium labor expenses have fallen year over year and sequentially. The second point I want to highlight is startup losses, which came in a couple of million dollars better than we expected for the first quarter. This is primarily due to timing related to construction and some uncertainties. We still anticipate that these losses will remain in the range of $50 million to $55 million for the full year, just to clarify. However, they were approximately $16 million in Q1, which is somewhat lower than our initial expectations. Those are really the two key points I'd like to mention regarding the quarter.

You mentioned a couple million dollars in favorable expenses, and you remained within your targeted range. Is that how you are assessing performance? I'm trying to understand how your results compare to the internal plan and the guidance you provided.

Yeah. I mean, we were up towards the higher end of our guide, with and that is very the things I just walked through, I think, specifically the startup losses. Those were what contributed us being at the high end of the guide, but we were performing right in line with our internal plan.

Okay. I know this isn't a metric that you talk about, but when I look at the revenue per average CTC, it's been declining for several quarters now. And just trying to maybe better understand why that metric would look like that.

I'll start, and Chris, you may want to jump in. But from a revenue perspective for CTC, I mean, as you know, there the CTC business has experienced just significant growth. I'm very, very pleased with the growth over the past few years. There was a lot that we could do to apply some muscle behind it and really, really get the most out of that business. The other thing that I would point out is if you look at the CTC business, we have found a very capital-friendly way to add facilities to the lineup and those are effectively acquiring subscale sort of ramping CTC facilities that we can buy for a very good price. And then we can put those in apply the Acadia methodology for running the operations and really ramp those pretty quickly. So, as we add those in, and they are in, similarly ramp position, you'll see that those will kind of pull down the average overall as we're ramping them. In the first quarter, we opened three new CTCs, and then we acquired an additional four, excuse me, that would fall into that category that I just mentioned. And so, when you think about that, that really is part of the timing of what you're seeing impact the revenue per clinic. I think, you know, just generally speaking, the revenue can clearly vary based on the size of the clinic, maturity, all those things. But I think what you're seeing with and to your question is those different nuances I just walked through.

Yeah, I would just add one thing, Heather, and I think that's the, so frequently the CTC market continues to be highly fragmented. And so, as a result when we do find these subscale acquisition opportunities that we can tuck in, they have frequently underinvested across the board and very, very frequently have a limited digital presence, frequently don't even have a website, and they certainly have not invested in the capabilities that we're able to bring in. So, all of that enables us to buy these subscale assets and ramp them more quickly. And I think that ties into your question in terms of the revenue per average CTC.

Hey, good morning. I'm just wondering on the new facilities, not the bed adds, but the new facilities, what sort of return target do you look at once the facility is fully ramped? And maybe it'd be helpful to kind of put that as an EBITDA, as enumerator and total investment as a denominator. And kind of as a car layer, are you sharpening your pencil on new opportunities to try to drive higher returns, or are you still kind of sticking with the historical? Thanks.

Hi John. Thanks for the question. If I think about, just in general the first part of your question, what do we do? We look at typically a couple things. First, as you can imagine, we look at our cost capital and we make sure that we understand all the moving parts. We also then ensure that we are applying a sort of margin or a cushion on top of that, make sure that we have returns that are, well above that cost of capital. And that one of the primary measures obviously that we use is return on invested capital. And we typically look at that on a very detailed basis for every project consistently, whether it's a de novo, a bed addition, an M&A, potential transaction, et cetera. So, we look at all those in the same way and just sort of apply a very disciplined approach across the board from a capital perspective. And so that is certainly something that we look at, sort of to the second part of your question what are we doing now? And sort of are we, I think you asked for rethinking what we have done. I'll just a little bit of detail on the process. You know, first we have multiple check-in points as we go throughout any project, as you can imagine, it's quite a large undertaking to make sure that we have all of the right pieces in place before we move forward the decision. We check in multiple times before we ultimately move forward as we gather more information. And so those checkpoints have always been there, very disciplined approach we have. Second, we've gone through a couple of pieces. First, everything that we had currently had in our pipeline, we've gone back and we have made sure that when we rerun sensitivities and we look at any perspectives that we think we need to have a different lens on that those still meet the thresholds that we originally set out to meet. Whenever we think about capital deployment, and ensure that those are still sort of all viable projects that we would like to do. Fortunately, we have a lot of different opportunities to deploy capital. And so, if we find something that no longer meets what we think we should have as a required return, then we can move to the next thing. Maybe what the other thing that I would point out is for future projects, we have obviously incorporated some sensitivity analysis, both on a rate and a construction cost side, so that we can ensure we have a flexible view and we can sensitize those and ensure that we have the right perspective as we move forward. So maybe if I just sum all that up, I think we would say very, very disciplined approach. We're very careful with how we select investments. We have a very thorough conversation over multiple periods.

Second question is, when we think about the future of, you had a pretty sizable legal accrual in the first quarter, how do we think about, is that the high-water marker? How should we think about that number for the rest of the year? Thank you.

Yes, I believe you’re asking about the legal costs rather than a legal accrual. I just want to ensure I'm addressing the correct question. To clarify, we are currently navigating multiple matters, specifically collaborating closely and diligently with both the Department of Justice and the Securities and Exchange Commission. We have hired an excellent law firm to assist us so we can continue to engage with them effectively. We are making significant efforts to respond promptly to all inquiries. What you are witnessing, John, is the extensive list of tasks being undertaken in order to address and engage with all those questions. That is what is driving the situation. Regarding the pace of progress, it is difficult to predict what the future holds. However, I can say that in the initial stages of the investigation, there is a considerable amount of preliminary work to complete. Again, we are striving to work as quickly as we can. I hope that provides some clarity.

Just take my questions and I can confirm that the webcast is down getting a dozen reports of that right now, so people are unable to join right now. It falls to A.J.'s question, just can you give us sort of guidance of how we should think about sort of 2Qs percentage of annual guidance, and a bridge just for how you can get to that number. I believe that, like you talked about $15 million beneficial supplement payment coming in 2Q by any bridge would be helpful as you think about the ramp from the first quarter results.

Yes. Sure. Hi, Pito. I'll start by saying I'm not going to get into Q2 guidance, but let me just point out a couple of things. I mean, very clearly, the biggest swing factor is sort of the supplemental payments and specifically the Tennessee program. So that is certainly one that we are watching and thinking about timing, to the extent that that is approved, there would be a significant impact to whichever quarter that is approved in. From our perspective, we have we pointed this out in the fourth quarter call and just to reiterate for our perspective we've assumed that that comes in the second half of the year. And so, to the extent that that comes in earlier in Q2, that would be a swing factor for what we have thought through. And, you know, the rest of the things that I talked through a little bit earlier in regards to how you can think about the ramping there's the bed additions and the new beds those are going to continue to steadily improve again, supplemental, very much the largest swing factor here. And just thinking about how we move throughout the balance of the year Q4 is when we're going to lap things. And so, if you think about the balance of Q1 versus Q2, Q3, Q4, there will be some significant differences between Q4 and the rest of the year. That's probably the best guidance I can give you. I talked about a little bit earlier that we expect startup losses still to be in the 50 to 55 range for the full year. I think Q2 will look fairly similar to Q1, maybe a little bit less. But that's probably about the only thing that I could point to.

Okay. Fair enough. And then if all to which question on CTC, you would ask a different direction. CTC revenues were flat sequentially. The number of patients grew, I think, let's say 2000 or almost sort of 3%. So, can you talk about what you're seeing on CTCs from a pricing perspective? Just, I'm trying to figure out what look at the flat revenues. What patients are growing to figure out is pricing under pressure? What are you seeing there? Thanks so much.

Yeah, Peter, this is Chris. Let me take that one. You know, I would say CTC revenue grew 3.6% year over year in Q1, and that was generally in line with the growth rate that we'd reported in the second half of ‘24. The service line, as we've discussed before, it's stepping over some pretty tough costs from the first half of ‘24. And there was also some modest unfavorable impact from weather that we also saw in Q1. But you know, as we discussed in the first quarter, we opened the three new facilities, the three new CTCs, we acquired an additional four as Heather said earlier. And those are progressing well. There isn't anything that we would call out with respect to pricing though on CTC.

So, I mean, just to follow up there because you're losing the patients and CTC you know, the end of December is 72,000, now it's 74,000. That implies you have 2000 more patients, but revenues are flat sequentially. So yes. How would a growing census by 2000 from 4Q to 1Q not impact revenues increasing sequentially? Thank you.

Sorry, let me finish your question. You're saying how if we grew the volume of patients, why did revenue not grow sequentially? Is that your question?

Correct.

There are some timing factors related to payments that, while not as significant as those on the acute side of the business, can still influence the timing of revenue through smaller supplemental payment streams. We have varying rates across different states, and as these rate updates are implemented, they can introduce what appears to be some supplemental fluctuations, but these are simply adjustments in rates. Additionally, we've closed a few facilities, which will have an effect. While we did not close high-volume facilities, the ones that were closed were contributing some revenue but did not align well with our business in terms of EBITDA contribution. This can certainly influence revenue and top-line figures, but it will not affect the EBITDA contribution. Those are the main points I wanted to highlight. I hope this clarifies things a bit.

Hi, good morning. There's been a year over year decline in specialty revenue looks like for five quarters in a row now, which has contributed to the broader deceleration in same store revenue. Can you help us understand what's going on with that line specifically and when you expect to get back on track for growth? Thanks.

Yeah, yeah, I'll jump in. Hi Andrew. So, a couple things I would point to. First is we've closed some specialty facilities over the past several quarters, and obviously, we closed one in Q1 of this year, and then there were a few others that we've closed over the past handful of quarters. And so that's part of what is contributing to that. It was about 5% down in the first quarter, and that's really mostly driven by the facility closures. You know, over the past I would say, I don't know, year and a half, we've wound down four specialty facilities, and that includes the one that I just mentioned in the fourth quarter. So that's part of it. The other part is if you think about it, just from a revenue perspective, we have seen some nice growth in the Medicaid specialty inpatient business. Obviously, that has a differential from just a year-over-year perspective on the overall revenue contribution for that, depending on the type of treatment that those patients need. But really, I think it's mostly driven by the closures.

This concludes our question-and-answer session. I'd like to turn the conference back over to Chris Hunter for any closing remarks.

Thank you. In closing, I just want to again thank our committed facility leaders, clinicians, and approximately 26,000 dedicated employees across the country who've continued to work tirelessly to meet the needs of our patients in a safe and effective manner. We are together doing incredibly important work for our patients across the country, and remain committed to serving them with care, compassion, and excellence. Thank you all for being with us this morning and for your interest in Acadia. Have a great day.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.