8-K
Acadia Healthcare Company, Inc. (ACHC)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): January 19, 2021
Acadia Healthcare Company, Inc.
(Exact name of registrant as specified in its charter)
| Delaware | 001-35331 | 45-2492228 |
|---|---|---|
| (State or other jurisdiction<br> <br>of incorporation) | (Commission<br> <br>File Number) | (IRS Employer<br> <br>Identification Number) |
| 6100 Tower Circle, Suite 1000<br> <br>Franklin, Tennessee | 37067 | |
| (Address of principal executive offices) | (Zip Code) |
(615) 861-6000
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading<br> <br>Symbol(s) | Name of each exchange<br> <br>on which registered |
|---|---|---|
| Common Stock, $0.01 par value | ACHC | NASDAQ Global Select Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
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 revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.01 | Completion of Acquisition of Disposition of Assets. |
|---|
As previously reported, on January 7, 2021, Acadia Healthcare Company, Inc., a Delaware corporation (the “Company”), entered into a Share Purchase Agreement (the “SPA”) with 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 “Purchaser”), relating to the acquisition by the Purchaser from the Company of all of the securities (the “Shares”) issued by AHC-WW Jersey Limited, a private limited liability company incorporated in Jersey and a subsidiary of the Company, which constitutes the entirety of the Company’s U.K. business operations, operated under the Company’s Priory Group business (the “Transaction”).
On January 19, 2021, the Company completed the Transaction. The purchase price was approximately £1,078 million. The Company received proceeds of approximately $1,350 million, net of transaction costs and the settlement of existing foreign currency hedging liabilities and based on the current GBP/USD exchange rate.
| Item 9.01 | Financial Statements and Exhibits |
|---|
(b) Pro Forma Financial Information.
The Company’s unaudited pro forma condensed consolidated financial statements giving effect to the Transaction are filed as Exhibit 99.1 hereto and are incorporated by reference herein.
(c) Exhibits
| Exhibit<br>No. | Description |
|---|---|
| 99.1 | Acadia Healthcare Company, Inc. Unaudited Pro Forma Condensed Consolidated Financial Statements. |
| 104 | Cover Page Interactive Data (embedded within the Inline XBRL document). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| ACADIA HEALTHCARE COMPANY, INC. | ||
|---|---|---|
| Date: January 21, 2021 | By: | /s/ Christopher L. Howard |
| Christopher L. Howard | ||
| Executive Vice President, Secretary and General Counsel |
EX-99.1
Exhibit 99.1
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The tables below set forth the unaudited pro forma condensed combined financial data for Acadia Healthcare Company, Inc. (the “Company”) giving effect to the Company’s disposition of AHC-WW Jersey Limited (the “U.K. Divestiture”), a private limited liability company incorporated in Jersey and a subsidiary of the Company, which constitutes the entirety of the Company’s U.K. business operations.
The unaudited pro forma condensed combined balance sheet reflects the U.K. Divestiture, the related debt repayment and cross currency swap settlement as if such events occurred on September 30, 2020.
The unaudited pro forma condensed combined statements of operations for the nine months ended September 30, 2020 and each of the years ended December 31, 2017, 2018 and 2019 present income (loss) and give effect to the U.K. Divestiture and related debt repayment as if such events occurred at the beginning of the respective period.
The unaudited pro forma condensed combined financial data has been prepared under U.S. GAAP. The adjustments necessary to fairly present the unaudited pro forma condensed combined financial data have been made based on available information and in the opinion of management are reasonable. Assumptions underlying the pro forma adjustments are described in the accompanying notes, which should be read in conjunction with this unaudited pro forma condensed combined financial data. The pro forma adjustments related to the U.K. Divestiture are preliminary.
The unaudited pro forma condensed combined financial data is for illustrative purposes only and does not purport to represent what our financial position or results of operations would have been had the events noted above in fact occurred on the assumed dates. Accordingly, the unaudited pro forma condensed combined financial information should not be used to project our financial position or results of operations for any future date or future period.
The unaudited pro forma condensed combined financial data should be read in conjunction with the consolidated financial statements and notes thereto of Acadia Healthcare Company, Inc. included in our filings with the Securities and Exchange Commission.
1
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
As of September 30, 2020
(In thousands)
| Acadia (1) | UK<br>Divestiture (2) | TransactionAccountingAdjustments (3) | Notes | Acadia<br>Pro Forma | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ASSETS | |||||||||||||||
| Current assets: | |||||||||||||||
| Cash and cash equivalents | $ | 338,702 | $ | (50,568 | ) | $ | 74,502 | (4 | ) | $ | 362,636 | ||||
| Accounts receivable, net | 333,231 | (51,705 | ) | 281,526 | |||||||||||
| Other current assets | 84,477 | (11,783 | ) | 2,989 | (5 | ) | 75,683 | ||||||||
| Total current assets | 756,410 | (114,056 | ) | 77,491 | 719,845 | ||||||||||
| Property and equipment, net | 3,253,720 | (1,656,129 | ) | 1,597,591 | |||||||||||
| Goodwill | 2,460,722 | (355,358 | ) | 2,105,364 | |||||||||||
| Intangible assets, net | 90,023 | (21,018 | ) | 69,005 | |||||||||||
| Deferred tax assets | 3,242 | — | 3,242 | ||||||||||||
| Operating lease<br>right-of-use assets | 464,596 | (364,557 | ) | 100,039 | |||||||||||
| Other assets | 76,432 | (10,251 | ) | 66,181 | |||||||||||
| Total assets | $ | 7,105,145 | $ | (2,521,369 | ) | $ | 77,491 | $ | 4,661,267 | ||||||
| LIABILITIES AND EQUITY | |||||||||||||||
| Current liabilities: | |||||||||||||||
| Current portion of long-term debt | $ | 50,858 | $ | — | $ | 50,858 | |||||||||
| Accounts payable | 130,395 | (32,837 | ) | 97,558 | |||||||||||
| Accrued salaries and benefits | 138,476 | (30,679 | ) | 107,797 | |||||||||||
| Current portion of operating lease liabilities | 30,433 | (11,575 | ) | 18,858 | |||||||||||
| Other accrued liabilities | 251,177 | (88,927 | ) | 162,250 | |||||||||||
| Total current liabilities | 601,339 | (164,018 | ) | 437,321 | |||||||||||
| Long-term debt | 3,067,243 | — | (1,350,000 | ) | (4 | ) | 1,717,243 | ||||||||
| Deferred tax liabilities | 104,351 | (50,205 | ) | 2,989 | (5 | ) | 57,135 | ||||||||
| Operating lease liabilities | 477,355 | (390,392 | ) | 86,963 | |||||||||||
| Derivative instrument liabilities | 39,859 | — | (39,859 | ) | (4 | ) | — | ||||||||
| Other liabilities | 153,812 | (14,654 | ) | 139,158 | |||||||||||
| Total liabilities | 4,443,959 | (619,269 | ) | (1,386,870 | ) | 2,437,820 | |||||||||
| Redeemable noncontrolling interests | 54,547 | — | 54,547 | ||||||||||||
| Equity: | |||||||||||||||
| Equity of parent | — | (1,902,100 | ) | 1,902,100 | (8 | ) | — | ||||||||
| Common stock | 879 | — | 879 | ||||||||||||
| Additional paid-in capital | 2,572,587 | — | 2,572,587 | ||||||||||||
| Accumulated other comprehensive loss | (440,113 | ) | — | 440,113 | (7 | ) | — | ||||||||
| Retained earnings | 473,286 | — | (877,852 | ) | (8 | ) | (404,566 | ) | |||||||
| Total equity | 2,606,639 | (1,902,100 | ) | 1,464,361 | 2,168,900 | ||||||||||
| Total liabilities and equity | $ | 7,105,145 | $ | (2,521,369 | ) | $ | 77,491 | $ | 4,661,267 |
See accompanying notes to unaudited pro forma condensed combined financial information. ****
2
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
For the Nine Months Ended September 30, 2020
(In thousands, except per share amounts)
| Acadia (1) | UK<br>Divestiture (2) | TransactionAccountingAdjustments (3) | Notes | Acadia<br>Pro Forma | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | $ | 2,366,425 | $ | (817,772 | ) | $ | 1,548,653 | ||||||||
| Salaries, wages and benefits | 1,318,378 | (465,514 | ) | 852,864 | |||||||||||
| Professional fees | 183,273 | (92,265 | ) | 91,008 | |||||||||||
| Supplies | 93,302 | (28,274 | ) | 65,028 | |||||||||||
| Rents and leases | 62,833 | (34,857 | ) | 27,976 | |||||||||||
| Other operating expenses | 288,222 | (85,683 | ) | 202,539 | |||||||||||
| Depreciation and amortization | 126,037 | (55,738 | ) | 70,299 | |||||||||||
| Interest expense, net | 119,064 | (667 | ) | (55,700 | ) | (9 | ) | 62,697 | |||||||
| Debt extinguishment costs | 3,271 | — | 3,271 | ||||||||||||
| Loss on impairment | 20,239 | (20,239 | ) | — | |||||||||||
| Transaction-related expenses | 17,293 | (7,736 | ) | 9,557 | |||||||||||
| Total expenses | 2,231,912 | (790,973 | ) | (55,700 | ) | 1,385,239 | |||||||||
| Income before income taxes | 134,513 | (26,799 | ) | 55,700 | 163,414 | ||||||||||
| Provision for income taxes | 21,171 | (4,833 | ) | 15,131 | (10 | ) | 31,469 | ||||||||
| Net income | 113,342 | (21,966 | ) | 40,569 | 131,945 | ||||||||||
| Net income attributable to noncontrolling interests | (1,802 | ) | — | (1,802 | ) | ||||||||||
| Net income attributable to Acadia Healthcare Company, Inc. | $ | 111,540 | $ | (21,966 | ) | $ | 40,569 | $ | 130,143 | ||||||
| Earnings per share attributable to Acadia Healthcare Company, Inc. stockholders: | |||||||||||||||
| Basic | $ | 1.27 | $ | 1.48 | |||||||||||
| Diluted | $ | 1.26 | $ | 1.47 | |||||||||||
| Weighted-average shares outstanding: | |||||||||||||||
| Basic | 87,849 | 87,849 | |||||||||||||
| Diluted | 88,449 | 88,449 |
See accompanying notes to unaudited pro forma condensed combined financial information.
3
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
For the Year Ended December 31, 2019
(In thousands, except per share amounts)
| Acadia (1) | UK<br>Divestiture (2) | TransactionAccountingAdjustments (3) | Notes | Acadia<br>Pro Forma | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | $ | 3,107,462 | $ | (1,099,081 | ) | $ | 2,008,381 | ||||||||
| Salaries, wages and benefits | 1,717,180 | (611,565 | ) | 1,105,615 | |||||||||||
| Professional fees | 240,983 | (122,531 | ) | 118,452 | |||||||||||
| Supplies | 123,061 | (37,526 | ) | 85,535 | |||||||||||
| Rents and leases | 82,229 | (46,742 | ) | 35,487 | |||||||||||
| Other operating expenses | 375,433 | (115,900 | ) | 259,533 | |||||||||||
| Depreciation and amortization | 164,044 | (76,121 | ) | 87,923 | |||||||||||
| Interest expense, net | 187,094 | 232 | (74,000 | ) | (9 | ) | 113,326 | ||||||||
| Loss on impairment | 54,386 | (27,169 | ) | 27,217 | |||||||||||
| Transaction-related expenses | 27,064 | (5,908 | ) | 21,156 | |||||||||||
| Total expenses | 2,971,474 | (1,043,230 | ) | (74,000 | ) | 1,854,244 | |||||||||
| Income before income taxes | 135,988 | (55,851 | ) | 74,000 | 154,137 | ||||||||||
| Provision for income taxes | 25,866 | (781 | ) | 20,102 | (10 | ) | 45,187 | ||||||||
| Net income | 110,122 | (55,070 | ) | 53,898 | 108,950 | ||||||||||
| Net income attributable to noncontrolling interests | (1,199 | ) | — | (1,199 | ) | ||||||||||
| Net income attributable to Acadia Healthcare Company, Inc. | $ | 108,923 | $ | (55,070 | ) | $ | 53,898 | $ | 107,751 | ||||||
| Earnings per share attributable to Acadia Healthcare Company, Inc. stockholders: | |||||||||||||||
| Basic | $ | 1.24 | $ | 1.23 | |||||||||||
| Diluted | $ | 1.24 | $ | 1.23 | |||||||||||
| Weighted-average shares outstanding: | |||||||||||||||
| Basic | 87,612 | 87,612 | |||||||||||||
| Diluted | 87,816 | 87,816 |
See accompanying notes to unaudited pro forma condensed combined financial information.
4
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
For the Year Ended December 31, 2018
(In thousands, except per share amounts)
| Acadia (1) | UK<br>Divestiture (2) | TransactionAccountingAdjustments | Notes | Acadia<br>Pro Forma | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | $ | 3,012,442 | $ | (1,107,748 | ) | $ | 1,904,694 | |||||||
| Salaries, wages and benefits | 1,659,348 | (611,980 | ) | 1,047,368 | ||||||||||
| Professional fees | 227,425 | (117,377 | ) | 110,048 | ||||||||||
| Supplies | 119,314 | (37,852 | ) | 81,462 | ||||||||||
| Rents and leases | 80,282 | (45,967 | ) | 34,315 | ||||||||||
| Other operating expenses | 354,498 | (110,828 | ) | 243,670 | ||||||||||
| Depreciation and amortization | 158,832 | (78,489 | ) | 80,343 | ||||||||||
| Interest expense, net | 185,410 | (876 | ) | 184,534 | ||||||||||
| Debt extinguishment costs | 1,815 | — | 1,815 | |||||||||||
| Legal settlement expense | 22,076 | — | 22,076 | |||||||||||
| Loss on impairment | 337,889 | (337,889 | ) | — | ||||||||||
| Transaction-related expenses | 34,507 | (4,787 | ) | 29,720 | ||||||||||
| Total expenses | 3,181,396 | (1,346,045 | ) | 1,835,351 | ||||||||||
| (Loss) income before income taxes | (168,954 | ) | 238,297 | 69,343 | ||||||||||
| Provision for income taxes | 6,532 | 3,374 | 9,906 | |||||||||||
| Net (loss) income | (175,486 | ) | 234,923 | 59,437 | ||||||||||
| Net income attributable to noncontrolling interests | (264 | ) | — | (264 | ) | |||||||||
| Net (loss) income attributable to Acadia Healthcare Company, Inc. | $ | (175,750 | ) | $ | 234,923 | $ | 59,173 | |||||||
| (Loss) earnings per share attributable to Acadia Healthcare Company, Inc. stockholders: | ||||||||||||||
| Basic | $ | (2.01 | ) | $ | 0.68 | |||||||||
| Diluted | $ | (2.01 | ) | $ | 0.68 | |||||||||
| Weighted-average shares outstanding: | ||||||||||||||
| Basic | 87,288 | 87,288 | ||||||||||||
| Diluted | 87,288 | 127 | (11 | ) | 87,415 |
See accompanying notes to unaudited pro forma condensed combined financial information.
5
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
For the Year Ended December 31, 2017
(In thousands, except per share amounts)
| Acadia (1) | UK<br>Divestiture (2) | TransactionAccountingAdjustments | Notes | Acadia<br>Pro Forma | |||||
|---|---|---|---|---|---|---|---|---|---|
| Revenue | $ | 2,836,316 | $ | (1,026,472 | ) | $ | 1,809,844 | ||
| Salaries, wages and benefits | 1,536,160 | (562,653 | ) | 973,507 | |||||
| Professional fees | 196,223 | (90,203 | ) | 106,020 | |||||
| Supplies | 114,439 | (34,890 | ) | 79,549 | |||||
| Rents and leases | 76,775 | (42,271 | ) | 34,504 | |||||
| Other operating expenses | 331,827 | (99,280 | ) | 232,547 | |||||
| Depreciation and amortization | 143,010 | (72,016 | ) | 70,994 | |||||
| Interest expense, net | 176,007 | (1,312 | ) | 174,695 | |||||
| Debt extinguishment costs | 810 | — | 810 | ||||||
| Transaction-related expenses | 24,267 | (13,031 | ) | 11,236 | |||||
| Total expenses | 2,599,518 | (915,656 | ) | 1,683,862 | |||||
| Income before income taxes | 236,798 | (110,816 | ) | 125,982 | |||||
| Provision for income taxes | 37,209 | 443 | 37,652 | ||||||
| Net income | 199,589 | (111,259 | ) | 88,330 | |||||
| Net income attributable to noncontrolling interests | 246 | — | 246 | ||||||
| Net income attributable to Acadia Healthcare Company, Inc. | $ | 199,835 | $ | (111,259 | ) | $ | 88,576 | ||
| Earnings per share attributable to Acadia Healthcare Company, Inc. stockholders: | |||||||||
| Basic | $ | 2.30 | $ | 1.02 | |||||
| Diluted | $ | 2.30 | $ | 1.02 | |||||
| Weighted-average shares outstanding: | |||||||||
| Basic | 86,948 | 86,948 | |||||||
| Diluted | 87,060 | 87,060 |
See accompanying notes to unaudited pro forma condensed combined financial information.
6
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
(In thousands)
| 1) | The amounts in this column represent, for Acadia, actual financial position or results for the periods<br>presented. | ||
|---|---|---|---|
| 2) | The amounts in this column represent, for the U.K. Divestiture, actual financial position or results for the<br>periods presented. The exchange rates used for the U.K. Divestiture reflect actual exchange rates for each period presented. | ||
| --- | --- | ||
| 3) | The amounts in this column represent transaction accounting adjustments for the U.K. Divestiture, the related<br>debt repayment and cross currency swap settlement. | ||
| --- | --- | ||
| 4) | Reflects receipt and estimated use of proceeds from the U.K. Divestiture as follows: | ||
| --- | --- | ||
| U.K. Divestiture proceeds ^(a)^ | $ | 1,480,861 | |
| --- | --- | --- | --- |
| Transaction costs | (16,500 | ) | |
| Settlement of cross currency swap agreements | (39,859 | ) | |
| Repayment of long-term debt | (1,350,000 | ) | |
| $ | 74,502 | ||
| (a) | U.K. Divestiture proceeds reflect the purchase price of 1.12 billion British pounds (before cash retained<br>by the buyer) converted to U.S. Dollars at an average exchange rate of 1.363. The proceeds also reflect an additional $45 million of cross currency swap settlement not reflected in the $39.9 million cross currency swap liability at<br>September 30, 2020. | ||
| --- | --- | ||
| 5) | Reflects the removal of the deferred tax asset and related increase in income tax receivable as a result of the<br>settlement of the cross currency swap agreements. | ||
| --- | --- | ||
| 6) | Reflects settlement of investment in the Company’s entire U.K. business. | ||
| --- | --- | ||
| 7) | Reflects recognition of accumulated other comprehensive loss associated with foreign currency translation,<br>cross currency swaps and the U.K. defined benefit pension plan. | ||
| --- | --- | ||
| 8) | Reflects estimated loss on disposal: | ||
| --- | --- | ||
| U.K. Divestiture proceeds | $ | 1,480,861 | |
| --- | --- | --- | --- |
| Carrying value of U.K. investment | (1,902,100 | ) | |
| Recognition of accumulated other comprehensive loss | (440,113) | ||
| Transaction costs | (16,500 | ) | |
| $ | (877,852 | ) |
The loss on disposal does not include any tax benefit as a result of the loss due to limitations within the U.S. tax statutes on the Company’s ability to benefit from such loss in future periods.
| 9) | Reflects interest expense reduction for the associated long-term debt repayment of $1,350,000 assuming an<br>interest rate of approximately 5.5%, which is based on the Company’s weighted average interest rate and expected interest savings. |
|---|---|
| 10) | Reflects adjustments to income taxes to reflect the impact of the above pro forma adjustments applying combined<br>U.S. federal and state statutory tax rates. |
| --- | --- |
| 11) | Approximately 0.1 million of the outstanding restricted stock and shares of common stock issuable upon<br>exercise of outstanding stock option awards have been included in the calculation of weighted-average shares outstanding-diluted for pro forma purposes. These shares are excluded from the calculation of diluted loss per share for Acadia because the<br>net loss for the year ended December 31, 2018 causes such securities to be anti-dilutive. |
| --- | --- |
7