Acadia Healthcare Company, Inc.

Good morning, and welcome to Acadia Healthcare's third quarter 2022 earnings conference call. All participants will be in a listen-only mode. Should you need any 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 today. I would now like to turn the conference over to Gretchen Homrick. Please go ahead.

Good morning and welcome to Acadia's third quarter 2022 conference call. I'm Gretchen Homrick, Vice President of Investor Relations for Acadia. I'll first provide you with our safe harbor before turning the call over to our Chief Executive Officer, Chris Hunter. To the extent any non-GAAP financial measure is discussed in today's call, You will also 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 regarding Acadia's expected quarterly and annual financial performance for 2022 and beyond. You are hereby cautioned that these statements may be affected by the factors 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, At this time, for opening remarks, I would like to turn the conference call over to our Chief Executive Officer, Chris Hunter.

Thank you, Gretchen. Good morning, everyone, and thank you for being with us today for our third quarter 2022 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 performance for the third quarter of 2022, and then following our comments, we'll open the line for your questions. Looking back at the third quarter, the strong momentum continued in our business, reflecting robust demand for our behavioral health care services. We executed our strategy with favorable results across our key performance metrics, Our same facility revenue increased 10.2% compared with the third quarter of 2021, including an increase in revenue per patient day of 6.9% and an increase in patient days of 3.1%. We continue to experience positive trends in revenue per patient day as we have seen throughout 2022. our revenue per patient day growth continues to reflect the value of the services we provide and our strong payer relationships with rate increases received across many of our payers, geographic markets, and service lines. Demand for our services continues to grow, and we believe we are well positioned to maintain our strong growth trajectory. Without question, the critical need for behavioral health treatment has become a primary focus for health officials, medical professionals, and lawmakers across the country, further amplified by the added strains of the COVID-19 pandemic. Recent data last month from the Centers of Disease Control and Prevention showed the U.S. suicide rate rose 4% in 2021 after two consecutive years of declines, highlighting the critical need for early assessment and intervention. As a leading provider of behavioral health care services, we play a vital role in addressing this need. And we're fortunate to have an experienced and dedicated team of employees and clinicians across our operations who have worked tirelessly to meet the needs of those seeking treatment for mental health and substance use issues. They have navigated through the challenges of a tight labor market while seeking stability in our labor supply and cost. We have progressed on our key growth initiatives across all of our service lines this year. Acadia has a well-defined strategy for sustained long-term growth through four distinct pathways to expand our market reach. I will briefly update you on our accomplishments across these four pathways during the third quarter. Facility expansions remain the first and most efficient growth pathway as we can expand services in established markets with our existing infrastructure and experienced staff. In the third quarter, we added 132 beds to our existing facilities and expect to add another approximately 90 beds in the fourth quarter. In the second half of 2022, we will be adding over 200 beds to our existing facilities which are needed to meet the demand in our existing markets and will continue to support future growth. Additionally, we're on track to meet our goal of adding approximately 300 beds and new programs in calendar 2022. For our second growth pathway, we continue to develop wholly owned de novo facilities that meet the critical demand for behavioral health care services in underserved markets. there are significant opportunities across the country to address this unmet need at the local community level. We opened a 60-bed children's hospital in early July as the first stage of our Montrose Behavioral Health Hospital operations in Chicago. In addition to the children's hospital, we expect to begin operations at the 101-bed adult hospital and the outpatient facility in 2023, following the renovations of these facilities. We also continue to identify opportunities to expand our network of comprehensive treatment centers, or CTCs, to address the critical need for addiction treatment, specifically for patients dealing with opioid use disorder. During the third quarter, we opened new CTCs in Indiana and Florida, bringing our total to four CTCs open this year. We expect to meet our objective to open at least six new CTCs in 2022. Our third growth pathway is strategic partnerships with leading health systems across the country. We are proud to work with a growing number of premier health systems to expand behavioral health care treatment options in their respective communities. By working together, we leverage our behavioral health expertise and implement best practices to deliver high quality care and positive clinical outcomes for more patients. During the third quarter, We opened a new facility with our joint venture partner, Covenant Health, in Knoxville, Tennessee. We also broke ground on a new state-of-the-art behavioral health treatment and teaching hospital with our joint venture partner, Henry Ford Health, in the Detroit, Michigan metropolitan area. An important aspect of many of our joint venture partnerships is the academic focus and training of future clinicians. During the third quarter, our Belmont Behavioral Health Hospital in Philadelphia entered into a formal affiliation agreement with Thomas Jefferson University's Sidney Kimmel Medical College and Jefferson Health in Philadelphia, Pennsylvania, to further teaching and clinical care opportunities for students in behavioral health care. With our now 18 joint venture partners across the country and a solid pipeline of potential new partners, we expect this pathway to continue to be a strong driver of our growth. We are excited about the opportunities to extend our market reach with a shared commitment with our joint venture partners to address the critical demand for behavioral health care services. Our fourth pathway focuses on identifying strategic acquisition opportunities to grow our scale and expertise through investments and expansion and service offerings to further enhance our continuum of care. We are fortunate to have a strong balance sheet that supports our ability to pursue acquisitions along with opportunities through our other important growth pathways. So in conclusion, we are well positioned to build upon our strong growth trajectory and meet our previously stated development targets for the year, which are adding approximately 600 beds in 2022 through approximately 300 bed additions to existing facilities, opening one inpatient de novo, two facilities with JV partners, and at least six CTC locations. Before I turn the call over to David, I would like to highlight three new leadership appointments at Acadia. These leaders join a strong leadership team and will bring additional expertise in growth areas for the company. As we announced in September, Dr. Nasser Khan has been named Operations Group President of our CTC business and its growing network of 144 facilities. Nasser joins Acadia with experience as a medical doctor and an operational leader for a large healthcare system. His experience in process improvement innovative patient care, and network expansion will serve this business line well in the years to come. Secondly, Bill Priest was named Chief Compliance Officer in October. Bill will oversee the compliance function for Acadia, working with the team to oversee programs and standards that further our strategy and meet key performance measures, ensuring that Acadia maintains the highest industry standards. Bill is an experienced attorney with a strong background in compliance for healthcare companies. And lastly, I'm also pleased to announce the appointment of Andrew Lynch as our new Chief Strategy Officer. In this role, Andrew will work closely with our executive team and board to oversee the execution of Acadia's growth strategy. Andrew joins Acadia with experience in healthcare, technology, and data analytics strategy and innovation. We are delighted to have these three exceptional leaders join our team as we continue to build upon our strong foundation and attract strong talent into the company. I also want to mention we look forward to our first ever Investor Day, planned for Wednesday, December 7th, in Midtown Manhattan. Our management team will provide an in-depth look at our diverse service lines and our strategy initiatives to advance our leadership position in the behavioral healthcare industry. At this time, I will now turn the call over to David Duckworth to discuss our financial results for the quarter.