Acadia Healthcare Company, Inc.

Good morning and welcome to the Acadia Healthcare Second Quarter 2021 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Gretchen Homrick, Director of Investor Relations. Please go ahead.

Good morning and welcome to Acadia's second quarter 2021 conference call. I'm Gretchen Homrick, Director of Investor Relations for Acadia. I'll first provide you with our safe harbor before turning the call over to Chief Executive Officer Debbie Osteen. To the extent any non-GAAP financial measure is discussed in today's call, you will find a reconciliation of that measure to the most directly comparable financial measure calculated according to GAAP on our website by viewing yesterday's news release under the Investors link. 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 2021 and beyond. For this purpose, any statements made during this call that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words believes, anticipates, plans, expects, and similar expressions are intended to identify forward-looking statements. You are hereby cautioned that 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 second quarter news release, and consequently actual operations and results may differ materially from the results discussed in the forward-looking statements. The company undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise. At this time for opening remarks, I would like to turn the conference call over to Chief Executive Officer Debbie Osteen.

Good morning. and thank you for being with us today for our second quarter 2021 conference call. I'm here today with Chief Financial Officer David Duckworth and other members of our executive management team. David and I will provide some remarks about our financial and operating results for the second quarter of 2021 and our increased guidance for 2021. Following David's comments, we will open the line for your questions. We are very pleased with the momentum in our business to the second quarter as Acadia delivered a solid financial and operating performance. These results reflect increased demand for our behavioral health services and our continued focus on delivering efficiencies across our operations. We experienced favorable volume trends while providing exceptional patient care across all of our service lines. Before we get into the results, I want to commend Acadia's dedicated employees and clinicians across our operations who've continued to meet this critical demand for our services and provide high quality care in a safe and accessible manner. We have a proven operating model supported by an experienced team. as well as the financial strength to support our ability to reach more patients who need our services. For the second quarter of 2021, our facilities produced strong results. Our same facility revenue increased 18% compared with the second quarter of 2020, including a 9.8% increase in patient days and a 7.5% increase in revenue per patient day. As a reminder of the impact from the COVID pandemic and related restrictions, we experienced lower patient days in the second quarter of last year. Same facility patient days decreased 6.7% in April of 2020 as compared to 2019, reversed to an increase of 0.1% in May and in June surpassed our pre-COVID volumes and increased 4.7%. When adjusted for the approximate 5% volume impact from COVID last year, patient days increased approximately 4.8% for the second quarter of this year. We are pleased to see these solid volume trends. Leveraging the strength of our diversified service lines Acadia is well positioned to meet the needs of those seeking behavioral treatment, and we expect to see continued growth in demand. The stress and anxiety related to the pandemic had a profound effect on many individuals, especially those already struggling with mental health issues and substance use disorders. A Kaiser study in March 2021 found that about half of adults continue to report negative mental health impacts related to worry or stress from the pandemic, which compares to about the same percentage at the height of the pandemic in July 2020. We believe we are also seeing higher demand and societal acceptance of behavioral health increases with a greater push for access to treatment and expanded coverage options for those who seek treatment. On our previous investor calls, we have shared Acadia's growth strategy that is centered around four distinct pathways that we believe will provide additional opportunities for Acadia to reach more patients in new and existing markets. I'm pleased with the progress that we continue to make as we drive organic growth and make strategic investments designed to support our long-term growth across our service lines. Facility expansions remain a primary focus of our growth strategy and the best return on investment. We added 86 beds to our operations in the second quarter, which included 72 incremental beds from the opening of a 260-bed state-of-the-art replacement hospital for Belmont Behavioral Hospital in Philadelphia. We expect to meet our goal to add approximately 300 beds this year to meet the growing demand. We also continue to identify underserved markets for behavioral health and substance use treatment, including treatment of patients suffering with opioid use disorder. Preliminary data from the CDC indicates that drug overdose deaths increased nearly 30% in 2020 as a result of social isolation, trauma, and job losses from the pandemic, and the spread of fentanyl mixed in illicit drugs. To address this critical and growing need, we opened one CTC in the second quarter of 2021, following two new CTCs opened in the first quarter. CTCs operate on an outpatient basis and combine behavioral therapy and medication to achieve long-term recovery from opioid use disorder. We continue to see opportunities to help more individuals struggling with addiction, and we expect to open eight more CTCs in the second half of 2021. Another important growth opportunity for Acadia is the development of wholly-owned de novo facilities in markets with a shortage of beds for behavioral health treatment. On May 24th, we opened Glenwood Behavioral Health, an 80-bed hospital in Cincinnati, Ohio. This facility provides inpatient psychiatric treatment for those who are struggling with a mental health or a co-occurring substance use disorder. As mental health issues have gained more national attention, health systems across the country are looking for ways to integrate behavioral health and expand treatment options. Acadia has developed a favorable reputation as a preferred partner for many leading providers in attractive markets. We recently announced a joint venture with Bronson Healthcare, one of Michigan's leading integrated healthcare systems, to build a new 96-bed facility in Battle Creek, Michigan. With this addition, we now have 13 joint venture partnerships in place with premier health systems to expand our treatment network and improve access to care in more communities around the country. Joint venture partnerships such as Bronson provide an opportunity to leverage our combined expertise and resources with a shared commitment to provide quality care and achieve strong clinical outcomes. We will continue to pursue this important pathway of growth for Acadia in the year ahead and beyond. Finally, we also believe that the fragmented behavioral healthcare industry offers additional prospects for future acquisitions, and we are well positioned with sufficient capital to pursue these opportunities. We believe Acadia has the right strategy in place to expand our network through bed expansions, wholly owned de novo facilities, strategic joint ventures, and acquisitions. We are encouraged by the favorable trends in our business and believe we are well positioned to capitalize on the expected growth and demand for behavioral health services. As always, our primary mission is to meet this demand and support the patients and communities we serve. We will continue to focus on providing the highest quality of patient care while extending our market reach and advancing our position as a leading behavioral health care provider. Now, I will turn the call over to David Duckworth to discuss our financial results in more detail.