Acadia Healthcare Company, Inc.

Good morning and welcome to the Acadia Health Care's third quarter 2021 earnings 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. Please note this event is being recorded. I would now like to turn the conference over to Gretchen Homrick. Please go ahead.

Good morning and welcome to Acadia's Third 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 third 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 third 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 third quarter of 2021 and our guidance for 2021. Following our comments, we will open the line for your questions. We continue to see favorable momentum in our business in 2021. as Acadia delivered a solid financial and operating performance. Demand for our behavioral health services has remained strong, especially within our acute and specialty service lines. For the third quarter of 2021, our same facility revenue increased 7.9% compared with the third quarter of 2020. including a 5.6% increase in revenue per patient day and a 2.2% increase in patient days. We are pleased to see these solid volume trends, especially under challenging conditions we experienced in certain markets in the third quarter, which include Hurricane Ida and the surge of the Delta variant of COVID-19. We are extremely proud of our exceptional team of dedicated employees and clinicians across our operations who continue to support our patients with the highest level of care under extraordinary conditions. Above all, the safety of our patients is our top priority, and we remain focused on providing consistent care for those seeking treatment for mental health and substance use issues. Our financial results for the third quarter were adversely affected by disruptions from Hurricane Ida in Louisiana. We had an acute facility sustain damage from the hurricane, and the majority of patients had to be evacuated. As the damage to the facility is repaired, we are gradually opening units. With three units currently open, the census has started to ramp up. We expect the remaining two units to reopen over the course of the fourth quarter. Additionally, we had another facility located in Louisiana that experienced a brief temporary impact to their admissions. In total, the hurricane had a negative 0.3% impact on our revenue growth rate, and a one cent impact on adjusted EPS. In addition, our facilities in certain markets saw an elevated level of COVID-19 cases during the third quarter. We continued to see the vast majority of our facilities managed through the COVID wave using the protocols that we have had in place since 2020, with minimal disruption to patient volumes or operations. We are pleased that in all cases, COVID-related factors have proven to be temporary. Despite these challenges, we continue to manage our operations safely and efficiently while providing essential behavioral health treatment and maintaining our same high standards of patient care. The past 18 months have been for many the most difficult of their lives as we continue to deal with a global pandemic. 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. We've been fortunate to see the extraordinary efforts of Acadia's mental health clinicians physicians, nurses, and staff who have continued to help the patients who come to us for help and not allow COVID to disrupt the critical care our patients needed. At the same time, on a positive note, we are pleased to see issues surrounding mental health gaining more attention in the national spotlight. Many top professional athletes, corporate leaders, and other social influencers have come forward to share their own personal struggles and reduce the stigma around mental illness. As a result, we are 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. Acadia is well-positioned to meet the needs of those seeking behavioral treatment through our diversified service lines and proven operating model. 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. Throughout 2021, we have made significant progress in executing on this strategy. We have continued to make the right investments in initiatives across our service lines to support sustained long-term growth. During the third quarter, we added 104 beds to our operations, bringing our total to 282 bed additions to existing facilities this year. We believe facility expansions offer the highest return on investment for Acadia, and we expect to meet our goal of adding approximately 300 beds to facilities by the end of the year. We also opened two new comprehensive treatment centers in the third quarter, located in Tennessee and Florida. CTCs are designed to address the growing and critical need for addiction treatment, especially for patients dealing with opioid use disorder. Through the end of the third quarter, we have opened five CTCs and expect to open six additional CTCs in underserved markets by the end of 2021. Throughout the country, health systems are looking to integrate care and expand treatment options to meet the growing demand. By partnering with hospitals and health systems across the country through joint ventures, we are able to integrate physical and mental health services to develop innovative quality programs. We are proud of our 13 joint venture partnerships across the country. Acadia has a strong track record of successfully operating the seven joint venture facilities that have opened over the past few years. We are also excited about the opportunities to expand our reach into more communities and broke ground on new facilities with two JV partners, Geisinger and Lutheran Health Network of Indiana during the third quarter. We also continue to identify attractive acquisition opportunities that fit our profile and extend our market reach. providing another important pathway to growth. We 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. Our success to date in 2021 confirms the strength of our operating model and our ability to execute our strategy. Looking ahead, we will continue to expand our network and serve more patients through our four distinct pathways for growth. We recently announced two key additions to our management team who will each play an important role in the execution of our growth strategy. David Keys, has been named Chief Development Officer, bringing nearly two decades of experience in the healthcare services market and will focus on mergers and acquisitions and de novo development. Osei Mevs has been named Vice President of Government Relations and will oversee our government relations and public policy functions and strategies. His extensive experience in government relations and public policy and deep understanding of the healthcare industry will support our efforts to further educate policy makers and expand governmental support and funding. We welcome David and Osei to Acadia and we look forward to working together in our shared mission to raise awareness about mental health and extend our market reach to more patients and families in the communities we serve. We are encouraged by the favorable trends in our business and believe we are well positioned to capitalize on the expected growth in demand for behavioral health services. As with many other health care providers and other industries across the country, we are currently dealing with a tight labor market. However, We believe the diversity of our markets and service lines and our proactive focus helps us manage through this environment. Generally, the challenge that we have faced are temporary and market specific. We remain focused on ensuring that we have the level of staff to meet the demand in our markets across our 40 states. 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.