Acadia Healthcare Company, Inc. - FORM 8-K - EX-99.2

Attached files

file	filename
8-K - 8-K - Acadia Healthcare Company, Inc.	d740881d8k.htm
EX-23.1 - EX-23.1 - Acadia Healthcare Company, Inc.	d740881dex231.htm
EX-99.4 - EX-99.4 - Acadia Healthcare Company, Inc.	d740881dex994.htm
EX-99.1 - EX-99.1 - Acadia Healthcare Company, Inc.	d740881dex991.htm
EX-99.3 - EX-99.3 - Acadia Healthcare Company, Inc.	d740881dex993.htm

Exhibit 99.2

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The tables below set forth the unaudited pro forma condensed combined financial data for Acadia giving effect to Acadia’s planned acquisition of Partnerships in Care on July 1, 2014, the offering of common stock described in this prospectus supplement and Acadia’s planned debt financing transactions.

With respect to this offering, the unaudited pro forma condensed combined financial data is based on the assumption that Acadia is offering 7,344,998 shares of common stock at an assumed public offering price of $46.29 per share, which was the closing price of our common stock on June 6, 2014, as reported on the NASDAQ Global Market.

With respect to Acadia’s planned debt financing, the unaudited pro forma condensed combined financial data is based on the assumption that Acadia will issue $300,000,000 of incremental term loans through an amendment to its existing Amended and Restated Credit Agreement and borrow $56,000,000 on its existing revolving line of credit.

The unaudited pro forma condensed combined balance sheet as of March 31, 2014 reflects the effect of Acadia’s planned acquisition of Partnerships in Care as if it occurred on March 31, 2014.

The unaudited pro forma condensed combined statements of operations give effect to each transaction as if it occurred on January 1, 2013.

The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2013 combines the audited consolidated statement of operations of Acadia for that period, the unaudited consolidated statement of operations for Acadia’s completed acquisitions, and the audited consolidated statement of operations of Partnerships in Care for the period from January 1, 2013 to December 31, 2013.

The unaudited pro forma condensed combined statement of operations for the three months ended March 31, 2014 combines the unaudited consolidated statement of operations of Acadia for that period with the unaudited consolidated statement of operations of Partnerships in Care for the period from January 1, 2014 to March 31, 2014.

The unaudited pro forma condensed combined financial data has been prepared using the acquisition method of accounting for business combinations under 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 planned acquisition of Partnerships in Care are preliminary and revisions to the fair value of assets acquired and liabilities assumed may have a significant impact on the pro forma adjustments. A final valuation of assets acquired and liabilities assumed has not been completed and the completion of fair value determinations may result in changes in the values assigned to property and equipment and other assets (including intangibles) acquired and liabilities assumed.

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 actually would have been had the events noted above in fact occurred on the assumed dates or 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 and Partnerships in Care incorporated by reference in this prospectus supplement.

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

As of March 31, 2014

(In thousands)


	Acadia(1)		Partnerships in Care(2a)			Pro Forma Adjustments			Notes			Pro Forma Combined
ASSETS
Current assets:
Cash and cash equivalents	$	7,243	$	20,485		$	(20,485	)		(5	)	$	7,362
							119			(8	)
Accounts receivable, net		104,585		7,641									112,226
Deferred tax assets		17,029		—									17,029
Other current assets		28,180		5,409									33,589

Total current assets		157,037		33,535			(20,366	)					170,206
Property and equipment, net		403,366		895,673			(287,925	)		(7	)		1,011,114
Goodwill		665,421		—			84,457			(7	)		749,878
Intangible assets, net		20,730		—			3,000			(7	)		23,730
Deferred tax assets—noncurrent		4,325		—									4,325
Other assets		32,066		—			11,100			(8	)		43,166

Total assets		1,282,945		929,208			(209,734	)					2,002,419

LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt		9,570		—			3,000			(9	)		12,570
Accounts payable		28,405		6,410									34,815
Accrued salaries and benefits		32,257		6,292									38,549
Other accrued liabilities		27,673		8,209									35,882

Total current liabilities		97,905		20,911			3,000						121,816
Long-term debt		653,626		1,345,323			(992,323	)		(9	)		1,006,626
Deferred tax liabilities—noncurrent		15,399		76,064			(56,985	)		(7	)		34,478
Other liabilities		19,865		6,284									26,149

Total liabilities		786,795		1,448,582			(1,046,308	)					1,189,069
Equity:
Common stock		502		—			73			(8	)		575
Additional paid-in capital		464,188		—			324,927			(8	)		789,115
Retained earnings (accumulated deficit)		31,460		—			(7,800	)		(8	)		23,660
Investment in Parent		—		(519,374	)		519,374			(6	)		—

Total equity		496,150		(519,374	)		836,574						813,350

Total liabilities and equity	$	1,282,945	$	929,208		$	(209,734	)				$	2,002,419

See accompanying notes to unaudited pro forma financial information.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

For the Year Ended December 31, 2013

(In thousands, except per share amounts)


	Acadia(1)			Completed Acquisitions Pro Forma Adjustment(3)			Notes			Acadia Pro Forma			Partnerships in Care(2b)			Pro Forma Adjustments			Notes			Pro Forma Combined
Revenue before provision for doubtful accounts	$	735,109		$	23,111					$	758,220		$	267,031								$	1,025,251
Provision for doubtful accounts		(21,701	)		(933	)					(22,634	)		(11	)								(22,645	)

Revenue		713,408			22,178						735,586			267,020									1,002,606
Salaries, wages and benefits		407,962			12,312						420,274			151,493									571,767
Professional fees		37,171			1,567						38,738			11,294									50,032
Supplies		37,569			1,176						38,745			9,755									48,500
Rents and leases		10,049			1,228						11,277			1,605									12,882
Other operating expenses		80,572			2,625						83,197			24,050									107,247
Depreciation and amortization		17,090			501						17,591			21,173			(5,957	)		(10	)		32,807
Interest expense, net		37,250			2,603						39,853			77,373			(61,357	)		(11	)		55,869
Debt extinguishment costs		9,350			—						9,350			—									9,350
Transaction-related expenses		7,150			(1,403	)		(12	)		5,747			—			(184	)		(12	)		5,563

Total expenses		644,163			20,609						664,772			296,743			(67,498	)					894,017
Income (loss) from continuing operations before income taxes		69,245			1,569						70,814			(29,723	)		67,498						108,589
Provision (benefit) for income taxes		25,975			588						26,563			(12,844	)		21,029			(13	)		34,748

Income (loss) from continuing operations	$	43,270		$	981					$	44,251		$	(16,879	)	$	46,469					$	73,841

Earnings per share—income (loss) from continuing operations:
Basic	$	0.87								$	0.88											$	1.29

Diluted	$	0.86								$	0.88											$	1.28

Weighted average shares:
Basic		50,004									50,004						7,345			(14	)		57,349
Diluted		50,261									50,261						7,345			(14	)		57,606

See accompanying notes to unaudited pro forma financial information.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

For the Three Months Ended March 31, 2014

(In thousands, except per share amounts)


	Acadia(1)			Partnerships in Care(2c)			Pro Forma Adjustments			Notes			Pro Forma Combined
Revenue before provision for doubtful accounts	$	206,119		$	69,450								$	275,569
Provision for doubtful accounts		(4,701	)		—									(4,701	)

Revenue		201,418			69,450									270,868
Salaries, wages and benefits		117,575			40,797									158,372
Professional fees		10,382			3,116									13,498
Supplies		10,064			2,305									12,369
Rents and leases		2,769			448									3,217
Other operating expenses		23,110			6,944									30,054
Depreciation and amortization		5,436			5,767			(1,963	)		(10	)		9,240
Interest expense, net		9,707			20,809			(16,805	)		(11	)		13,711
Transaction-related expenses		1,579			—			(9	)		(12	)		1,570

Total expenses		180,622			80,186			(18,777	)					242,031
Income (loss) from continuing operations before income taxes		20,796			(10,736	)		18,777						28,837
Provision (benefit) for income taxes		7,775			15			1,438			(13	)		9,228

Income (loss) from continuing operations	$	13,021		$	(10,751	)	$	17,339					$	19,609

Earnings per share—income (loss) from continuing operations:
Basic	$	0.26											$	0.34

Diluted	$	0.26											$	0.34

Weighted average shares:
Basic		50,120						7,345			(14	)		57,465
Diluted		50,486						7,345			(14	)		57,831

See accompanying notes to unaudited pro forma financial information.

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

(In thousands, except per share amounts)

(1)	The amounts in this column represent, for Acadia, actual results for the periods presented.

(2)

The historical financial statements of Partnerships in Care are prepared in accordance with U.K. GAAP and are adjusted to: (i) reconcile the financial statements to U.S. GAAP and (ii) translate the financial statements to U.S. dollars based on the historical exchange rates below. The Partnerships in Care financial statements have been reclassified to conform to Acadia’s financial statement presentation.


		GBP/USD
March 31, 2014	Period End Spot Rate	$	1.6637
Year ended December 31, 2013	Average Spot Rate	$	1.5643
Three months ended March 31, 2014	Average Spot Rate	$	1.6548

(a)

The amounts below represent results as of March 31, 2014.


	Partnerships in Care (in £, in U.K. GAAP)			U.S. GAAP Adjustments		Notes			Partnerships in Care (in £, in U.S. GAAP)			Partnerships in Care (in $, in U.S. GAAP)
Current assets:
Cash and cash equivalents	£	12,313		£					£	12,313		$	20,485
Accounts receivable, net		4,593								4,593			7,641
Deferred tax assets		—								—			—
Other current assets		3,251								3,251			5,409

Total current assets		20,157								20,157			33,535
Property and equipment, net		453,735			84,627		(4	)		538,362			895,673
Goodwill		—								—			—
Intangible assets, net		—								—			—
Deferred tax assets—noncurrent		—								—			—
Other assets		—								—			—

Total assets	£	473,892		£	84,627				£	558,519		$	929,208

Current liabilities:
Current portion of long-term debt	£	—		£					£	—		$	—
Accounts payable		3,853								3,853			6,410
Accrued salaries and benefits		3,782								3,782			6,292
Other accrued liabilities		4,934								4,934			8,209

Total current liabilities		12,569								12,569			20,911
Long-term debt		792,206			16,427		(4	)		808,633			1,345,323
Deferred tax liabilities—noncurrent		2,027			43,693		(4	)		45,720			76,064
Other liabilities		3,777								3,777			6,284

Total liabilities		810,579			60,120					870,699			1,448,582
Equity:
Investment in Parent		(336,687	)		24,507					(312,180	)		(519,374	)

Total equity		(336,687	)		24,507					(312,180	)		(519,374	)

Total liabilities and equity	£	473,892		£	84,627				£	558,519		$	929,208

(b)

The amounts below represent results for the year ended December 31, 2013.


	Partnerships in Care (in £, in U.K. GAAP)			U.S. GAAP Adjustments			Notes			Partnerships in Care (in £, in U.S. GAAP)			Partnerships in Care (in $, in U.S. GAAP)
Revenue before provision for doubtful accounts	£	170,703		£						£	170,703		$	267,031
Provision for doubtful accounts		(7	)								(7	)		(11	)

Revenue		170,696									170,696			267,020
Salaries, wages and benefits		98,345			(1,501	)		(4	)		96,844			151,493
Professional fees		7,220									7,220			11,294
Supplies		6,236									6,236			9,755
Rents and leases		1,026									1,026			1,605
Other operating expenses		15,374									15,374			24,050
Depreciation and amortization		11,458			2,077			(4	)		13,535			21,173
Interest expense, net		61,782			(12,320	)		(4	)		49,462			77,373
Transaction-related expenses		—									—			—

Total expenses		201,441			(11,744	)					189,697			296,743
Loss from continuing operations before income taxes		(30,745	)		11,744						(19,001	)		(29,723	)
Benefit for income taxes		(1,715	)		(6,496	)		(4	)		(8,211	)		(12,844	)

Loss from continuing operations	£	(29,030	)	£	18,240					£	(10,790	)	$	(16,879	)

(c)

The amounts below represent results for the three months ended March 31, 2014.


	Partnerships in Care (in £, in U.K. GAAP)			U.S. GAAP Adjustments			Notes			Partnerships in Care (in £, in U.S. GAAP)			Partnerships in Care (in $, in U.S. GAAP)
Revenue before provision for doubtful accounts	£	41,969		£						£	41,969		$	69,450
Provision for doubtful accounts		—									—			—

Revenue		41,969									41,969			69,450
Salaries, wages and benefits		25,091			(437	)		(4	)		24,654			40,797
Professional fees		1,883									1,883			3,116
Supplies		1,393									1,393			2,305
Rents and leases		271									271			448
Other operating expenses		4,196									4,196			6,944
Depreciation and amortization		2,966			519			(4	)		3,485			5,767
Interest expense, net		15,655			(3,080	)		(4	)		12,575			20,809
Transaction-related expenses		—									—			—

Total expenses		51,455			(2,998	)					48,457			80,186
Loss from continuing operations before income taxes		(9,486	)		2,998						(6,488	)		(10,736	)
Benefit for income taxes		(532	)		541			(4	)		9			15

Loss from continuing operations	£	(8,954	)	£	2,457					£	(6,497	)	$	(10,751	)

(3)	The amounts in this column represent pro forma adjustments for Acadia’s completed acquisitions of two facilities from United Medical Corporation and Cascade Behavioral Hospital (neither acquisition was individually material), actual results for the periods presented, up to the acquisition dates.

(4)

Reflects adjustments to reconcile U.K. GAAP to U.S. GAAP per the footnotes of Partnerships in Care Investments 1 Limited financial statements including (i) a property and equipment impairment charge and related depreciation expense adjustment, which would not have been recorded under U.S. GAAP; (ii) amortization of an interest rate swap, which would not have been recorded under U.S. GAAP; (iii) a share-based payment charge, which would not have been recorded under U.S. GAAP; and (iv) the tax impact of the previous adjustments.

(5)	Represents cash not acquired as part of the acquisition.

(6)	Reflects elimination of equity accounts of Partnerships in Care.

(7)	Represents adjustments based on preliminary estimates of fair value and the adjustment to goodwill derived from the difference in the estimated total consideration to be transferred by Acadia and the estimated fair value of assets acquired and liabilities assumed by Acadia, calculated as follows:


Estimated cash consideration	$	661,981
Cash and cash equivalents		—
Accounts receivable		7,641
Other current assets		5,409
Property and equipment		607,748
Intangible assets		3,000
Other long-term assets		—
Accounts payable		(6,410	)
Accrued salaries and benefits		(6,292	)
Other accrued liabilities		(8,209	)
Deferred tax liabilities—noncurrent		(19,079	)
Other long-term liabilities		(6,284	)

Fair value of assets acquired and liabilities assumed	$	577,524

Estimated goodwill	$	84,457

The acquired assets and liabilities will be recorded at their relative fair values as of the closing date of the acquisition. Estimated goodwill is based upon a determination of the fair value of assets acquired and liabilities assumed that is preliminary and subject to revision as the value of total consideration is finalized and additional information related to the fair value of property and equipment and other assets (including intangible assets) acquired and liabilities assumed becomes available. The actual determination of the fair value of assets acquired and liabilities assumed will differ from that assumed in these unaudited pro forma condensed combined financial statements and such differences may be material. Qualitative factors comprising goodwill include efficiencies derived through synergies expected by coordination of services provided across the combined network of facilities, achievement of operating efficiencies by benchmarking performance and applying best practices throughout the combined company.

(8)

Represents a $119 increase in cash as a result of the planned acquisition of Partnerships in Care and related financing transactions. Acadia expects to issue $300,000 of incremental term loans through an amendment to its existing Amended and Restated Credit Agreement, or Incremental Term Loans, borrow $56,000 on its existing revolving line of credit and issue additional common shares for estimated net proceeds of $325,000. Based on the assumed public offering price of $46.29 (the closing price of our common stock on June 6, 2014, as reported on the NASDAQ Global Market) the number of shares to be issued is 7,344,998 with a par value of $0.01, which results in additional common stock of $73 and additional paid-in capital of $324,927 and includes estimated underwriting discounts and other offering expenses of $15,000. The sources and uses of cash in connection with the acquisition are expected to be as follows:


Sources:
Incremental Term Loans	$	300,000
Revolving line of credit		56,000
Equity issuance		325,000
Uses:
Cash consideration		(661,981	)
Debt financing costs		(11,100	)
Acquisition costs(a)		(7,800	)

Cash adjustment	$	119

(a)

The effect of estimated acquisition costs are not included in the pro forma condensed combined statement of operations for the year ended December 31, 2013 and three months ended March 31, 2014.

(9)	Represents the elimination of debt not assumed in the Partnerships in Care acquisition, the issuance of Incremental Term Loans and borrowings under the existing revolving line of credit as follows:


	Current Portion		Long-term Portion			Total Debt
Elimination of debt not assumed	$	—	$	(1,345,323	)	$	(1,345,323	)
Incremental Term Loans		3,000		297,000			300,000
Revolving line of credit		—		56,000			56,000

Adjustments	$	3,000	$	(992,323	)	$	(989,323	)

(10)	Represents the adjustments to Partnerships in Care’s depreciation and amortization expense as a result of recording the property and equipment and intangible assets at preliminary estimates of fair value as of the date of the acquisitions, as follows:

(a)

Completed acquisitions:


	Amount		Useful Lives (in years)		Monthly Depreciation		Year Ended December 31, 2013			Three Months Ended March 31, 2014
Land	$	137,483		N/A	$	—	$	—		$	—
Building and improvements		455,764		30-50		950		12,168			3,042
Equipment		14,501		3-10		192		3,048			762

								15,216			3,804
Indefinite-lived intangible assets		607,748		N/A		1,142		—			—

Total depreciation and amortization expense								15,216			3,804
Less: historical depreciation and amortization expense								(21,173	)		(5,767	)

Depreciation and amortization expense adjustment							$	(5,957	)	$	(1,963	)

(11)

Represents an adjustment to interest expense to give effect to the Incremental Term Loans based on an estimated interest rate of 4.25% and to borrow $56,000 on its existing revolving line of credit and to eliminate interest expense on Partnerships in Care’s historical debt, which will be extinguished at closing. Interest expense includes related amortization of $1.6 million of deferred financing costs for the year ended December 31, 2013 and $0.4 million for the three months ended March 31, 2014.


	Year Ended December 31, 2013			Three Months Ended March 31, 2014
Interest related to Incremental Term Loan	$	12,750		$	3,188
Interest related to borrowings on revolving credit facility		1,680			420
Interest related to amortization of deferred financing costs		1,586			396
Less: historical interest expense		(77,373	)	$	(20,809	)

Interest expense adjustment	$	(61,357	)	$	(16,805	)

An increase or decrease of 0.125% in the assumed interest rate would result in a change of $375 for the year ended December 31, 2013 and $94 for the three months ended March 31, 2014.

(12)	Reflects the removal of acquisition-related expenses, related to Acadia’s completed acquisitions and Partnerships in Care, included in the historical statements of operations.

(13)	Reflects adjustments to income taxes to reflect the impact of the above pro forma adjustments applying combined U.S. federal and state statutory tax rates and U.K. statutory rates.

(14)

Represents adjustments to weighted average shares used to compute basic and diluted earnings per share to reflect the effect of an estimated 7,344,998 shares of common stock to be issued by Acadia in this offering, which resulted in an increase in weighted average shares outstanding of 7,344,998 shares for the year ended December 31, 2013 and the three months ended March 31, 2014. The proceeds from such offering of common stock are to be used to partially fund Acadia’s planned acquisition of Partnerships in Care.

Acadia Healthcare Company, Inc. - FORM 8-K - EX-99.2 - June 9, 2014

Attached files

Acadia Healthcare Company, Inc. Reports