Acadia Healthcare Company, Inc. - FORM 8-K - EX-99.1

Attached files

file	filename
8-K - 8-K - Acadia Healthcare Company, Inc.	d836261d8k.htm
EX-99.3 - EX-99.3 - Acadia Healthcare Company, Inc.	d836261dex993.htm
EX-99.4 - EX-99.4 - Acadia Healthcare Company, Inc.	d836261dex994.htm
EX-99.2 - EX-99.2 - Acadia Healthcare Company, Inc.	d836261dex992.htm
EX-23.1 - EX-23.1 - Acadia Healthcare Company, Inc.	d836261dex231.htm

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. (“Acadia”) giving effect to Acadia’s planned merger with CRC Health Group, Inc. (“CRC”) and the related issuance of common stock and debt financing transactions described herein.

With respect to the issuance of common stock, the unaudited pro forma condensed combined financial data is based on the assumption that Acadia will issue 6,262,046 shares of common stock to stockholders of CRC pursuant to the Agreement and Plan of Merger between Acadia, Copper Acquisition Co., Inc. and CRC dated October 29, 2014.

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 senior unsecured notes, issue $500,000,000 of term loans and borrow on its existing revolving line of credit at the closing date of the merger and also reflects the sixth amendment to Acadia’s credit facility effective as of December 15, 2014.

The unaudited pro forma condensed combined balance sheet as of September 30, 2014 reflects the effect of Acadia’s planned merger with CRC and the related financing transactions described above as if it occurred on September 30, 2014.

The unaudited pro forma condensed combined statements of operations present income (loss) from continuing operations and 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, the audited consolidated statement of operations of Partnerships in Care Investments 1 Limited (“Partnerships in Care”), the unaudited consolidated statement of operations for Acadia’s other completed acquisitions, the audited consolidated statement of operations of CRC, and the unaudited consolidated statement of operations for CRC’s completed acquisition of Habit Holdings, Inc. (“Habit”) for the period from January 1, 2013 to December 31, 2013.

The unaudited pro forma condensed combined statement of operations for the nine months ended September 30, 2014 combines the unaudited consolidated statement of operations of Acadia for that period, the unaudited consolidated statement of operations of Partnerships in Care for the six months ended June 30, 2014, the unaudited consolidated statement of operations for Acadia’s other completed acquisitions for the period prior to acquisition, the unaudited consolidated statement of operations of CRC for the nine months ended September 30, 2014, and the unaudited consolidated statement of operations of Habit for the period from January 1, 2014 to February 28, 2014 (the date CRC closed its acquisition of Habit).

The unaudited pro forma condensed combined statement of operations for the nine months ended September 30, 2013 combines the unaudited consolidated statement of operations of Acadia for that period, the unaudited consolidated statement of operations of Partnerships in Care for the nine months ended September 30, 2013, the unaudited consolidated statement of operations for Acadia’s other completed acquisitions for the period prior to acquisition, the unaudited consolidated statement of operations of CRC for the nine months ended September 30, 2013, and the unaudited consolidated statement of operations of Habit for the nine months ended September 30, 2013.

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 merger with CRC 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, Partnerships in Care and CRC.

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

As of September 30, 2014

(In thousands)


	Acadia(1)			CRC(2)			Pro Forma Merger Adjustments			Notes			Pro Forma Combined
ASSETS
Current assets:
Cash and cash equivalents	$	42,179		$	21,112		$	(16,112	)		(5	)	$	47,179
Accounts receivable, net		130,253			49,263									179,516
Deferred tax assets		19,782			—									19,782
Other current assets		37,626			15,902									53,528

Total current assets		229,840			86,277			(16,112	)					300,005
Property and equipment, net		1,026,378			128,851									1,155,229
Goodwill		804,647			559,613			463,037			(4	)		1,827,297
Intangible assets, net		21,621			266,639			(251,639	)		(4	)		36,621
Deferred tax assets—noncurrent		15,933			—			29,795			(4	)		45,728
Other assets		42,049			20,425			23,250			(5	)		67,652
								1,900			(5	)
								(19,972	)		(3	)

Total assets	$	2,140,468		$	1,061,805		$	230,259					$	3,432,532

LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt	$	13,320		$	4,709		$	12,041			(6	)	$	30,070
Accounts payable		43,260			5,841									49,101
Accrued salaries and benefits		56,213			22,777									78,990
Other accrued liabilities		29,747			29,002			(7,412	)					51,337

Total current liabilities		142,540			62,329			4,629						209,498
Long-term debt		1,016,002			874,669			42,139			(6	)		1,932,810
Deferred tax liabilities—noncurrent		64,771			137,835			(202,606	)		(4	)		—
Other liabilities		30,579			25,077									55,656

Total liabilities		1,253,892			1,099,910			(155,838	)					2,197,964
Equity:
Common stock		592			36			(36	)		(3	)		655
								63			(4	)
Additional paid-in capital		843,528			358,965			(358,965	)		(3	)		1,219,188
								375,660			(4	)
Retained earnings (accumulated deficit)		79,313			(396,858	)		396,858			(3	)		51,582
								(27,731	)		(5	)
Accumulated other comprehensive loss		(36,857	)		(248	)		248			(3	)		(36,857	)

Total equity (deficit)		886,576			(38,105	)		386,097						1,234,568

Total liabilities and equity	$	2,140,468		$	1,061,805		$	230,259					$	3,432,532

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(7)			Partnerships in Care(8a)			Pro Forma Adjustments			Notes			Acadia Pro Forma			CRC(2)			Habit(9)			Pro Forma Merger Adjustments			Notes			Pro Forma Combined
Revenue before provision for doubtful accounts	$	735,109		$	33,397		$	267,031		$						$	1,035,537		$	408,809		$	44,294		$						$	1,488,640
Provision for doubtful accounts		(21,701	)		(1,136	)		(11	)								(22,848	)		—			(886	)		(6,948	)		(16	)		(30,682	)

Revenue		713,408			32,261			267,020									1,012,689			408,809			43,408			(6,948	)					1,457,958

Salaries, wages and benefits		407,962			18,148			151,493									577,603			189,682			25,625									792,910
Professional fees		37,171			1,567			11,294									50,032			46,774			1,312									98,118
Supplies		37,569			1,382			9,755									48,706			19,386			1,628									69,720
Rents and leases		10,049			1,575			1,605									13,229			14,035			3,500									30,764
Other operating expenses		80,572			3,635			24,050									108,257			51,775			4,441									164,473
Depreciation and amortization		17,090			687			21,173			(5,420	)		(11a	)		33,530			19,398			1,930			(5,536	)		(11b	)		49,322
Interest expense, net		37,250			2,067			77,373			(60,432	)		(12a	)		56,258			70,699			575			(20,859	)		(12b	)		106,673
Provision for doubtful accounts		—			—			—									—			6,948			—			(6,948	)		(16	)		—
Debt extinguishment costs		9,350			—			—									9,350			—			—									9,350
Goodwill and asset impairments		—			—			—									—			19,341			—									19,341
Transaction-related expenses		7,150			—			—									7,150			—			—			(1,611	)		(13	)		5,539

Total expenses		644,163			29,061			296,743			(65,852	)					904,115			438,038			39,011			(34,954	)					1,346,210

Income (loss) from continuing operations before income taxes		69,245			3,200			(29,723	)		65,852						108,574			(29,229	)		4,397			28,006						111,748
Provision (benefit) for income taxes		25,975			1,200			(12,844	)		16,069			(14	)		30,400			1,790			1,790			11,202			(14	)		45,182

Income (loss) from continuing operations	$	43,270		$	2,000		$	(16,879	)	$	49,783					$	78,174		$	(31,019	)	$	2,607		$	16,804					$	66,566

Earnings per share—income (loss) from continuing operations:
Basic	$	0.87														$	1.33														$	1.02

Diluted	$	0.86														$	1.32														$	1.02

Weighted average shares:
Basic		50,004									8,882			(15a	)		58,886									6,262			(15b	)		65,148
Diluted		50,411									8,882			(15a	)		59,293									6,262			(15b	)		65,555

See accompanying notes to unaudited pro forma financial information.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

For the Nine Months Ended September 30, 2014

(In thousands, except per share amounts)


	Acadia(1)			Completed Acquisitions Pro Forma Adjustment(7)			Partnerships in Care(8b)			Pro Forma Adjustments			Notes			Acadia Pro Forma			CRC(2)			Habit(9)			Pro Forma Merger Adjustments			Notes			Pro Forma Combined
Revenue before provision for doubtful accounts	$	729,784		$	9,492		$	142,312		$						$	881,588		$	340,255		$	7,401		$						$	1,229,244
Provision for doubtful accounts		(20,084	)		(25	)		3									(20,106	)		—			(148	)		(5,718	)		(16	)		(25,972	)

Revenue		709,700			9,467			142,315									861,482			340,255			7,253			(5,718	)					1,203,272

Salaries, wages and benefits		408,680			5,021			84,641									498,342			157,792			4,021									660,155
Professional fees		36,151			467			6,737									43,355			30,297			225									73,877
Supplies		34,722			266			4,868									39,856			15,221			258									55,335
Rents and leases		8,872			574			909									10,355			12,925			522									23,802
Other operating expenses		79,188			1,043			11,644									91,875			41,474			698									134,047
Depreciation and amortization		21,696			51			11,731			(3,329	)		(11a	)		30,149			15,352			381			(3,889	)		(11b	)		41,993
Interest expense, net		33,505			720			43,084			(34,613	)		(12a	)		42,696			54,455			89			(16,733	)		(12b	)		80,507
Provision for doubtful accounts		—			—			—									—			5,718			—			(5,718	)		(16	)		—
Debt extinguishment costs		—			—			—									—			11,622			—									11,622
Gain on foreign currency derivatives		(15,262	)		—			—									(15,262	)		—			—									(15,262	)
Goodwill and asset impairments		—			—			—									—			1,089			—									1,089
Transaction-related expenses		10,834			—			—									10,834			—			—			(667	)		(13	)		10,167

Total expenses		618,386			8,142			163,614			(37,942	)					752,200			345,945			6,194			(27,007	)					1,077,332
Income (loss) from continuing operations before income taxes		91,314			1,325			(21,299	)		37,942						109,282			(5,690	)		1,059			21,289						125,940
Provision (benefit) for income taxes		30,383			497			30			(312	)		(14	)		30,598			254			304			8,516			(14	)		39,672

Income (loss) from continuing operations	$	60,931		$	828		$	(21,329	)	$	38,254					$	78,684		$	(5,944	)	$	755		$	12,773					$	86,268

Earnings per share—income (loss) from continuing operations:
Basic	$	1.14														$	1.33														$	1.32

Diluted	$	1.13														$	1.33														$	1.31

Weighted average shares:
Basic		53,670									5,433			(15a	)		59,103									6,262			(15b	)		65,365
Diluted		53,922									5,433			(15a	)		59,355									6,262			(15b	)		65,617

See accompanying notes to unaudited pro forma financial information.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

For the Nine Months Ended September 30, 2013

(In thousands, except per share amounts)


	Acadia(1)			Completed Acquisitions Pro Forma Adjustment(7)			Partnerships in Care(8b)			Pro Forma Adjustments			Notes			Acadia Pro Forma			CRC(2)			Habit(9)			Pro Forma Merger Adjustments			Notes			Pro Forma Combined
Revenue before provision for doubtful accounts	$	539,230		$	28,328		$	197,718		$						$	765,276		$	309,449		$	33,221		$						$	1,107,946
Provision for doubtful accounts		(15,821	)		(1,035	)		(32	)								(16,888	)		—			(664	)		(5,674	)		(16	)		(23,226	)

Revenue		523,409			27,293			197,686									748,388			309,449			32,557			(5,674	)					1,084,720
Salaries, wages and benefits		298,904			15,130			112,626									426,660			140,044			19,219									585,923
Professional fees		27,294			1,394			8,735									37,423			35,519			984									73,926
Supplies		28,017			1,215			7,220									36,452			14,458			1,221									52,131
Rents and leases		7,377			1,326			1,186									9,889			10,428			2,625									22,942
Other operating expenses		59,424			3,138			16,389									78,951			35,723			3,331									118,005
Depreciation and amortization		12,248			641			15,575			(3,898	)		(11a	)		24,566			14,363			1,448			(3,967	)		(11b	)		36,410
Interest expense, net		27,672			1,622			57,080			(44,375	)		(12a	)		41,999			52,791			431			(15,411	)		(12b	)		79,810
Provision for doubtful accounts		—			—			—									—			5,674			—			(5,674	)		(16	)		—
Debt extinguishment costs		9,350			—			—									9,350			—			—									9,350
Transaction-related expenses		3,813			—			—									3,813			—			—									3,813

Total expenses		474,099			24,466			218,811			(48,273	)					669,103			309,000			29,259			(25,052	)					982,310

Income (loss) from continuing operations before income taxes		49,310			2,827			(21,125	)		48,273						79,285			449			3,298			19,378						102,410
Provision (benefit) for income taxes		18,439			1,060			(9,471	)		12,171			(14	)		22,199			1,261			1,343			7,751			(14	)		32,554

Income (loss) from continuing operations	$	30,871		$	1,767		$	(11,654	)	$	36,102					$	57,086		$	(812	)	$	1,955		$	11,627					$	69,856

Earnings per share—income (loss) from continuing operations:
Basic	$	0.62														$	0.97														$	1.07

Diluted	$	0.61														$	0.97														$	1.07

Weighted average shares:
Basic		49,987									8,882			(15a	)		58,869									6,262						65,131
Diluted		50,213									8,882			(15a	)		59,095									6,262						65,357

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 amounts in this column represent, for CRC, actual results for the periods presented.

(3)	Reflects elimination of equity accounts and existing deferred financing costs of CRC.

(4)

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. The estimated equity consideration is based on the issuance of 6,262,046 shares of Acadia common stock with a par value of $0.01 at an assumed value of $60.00 per share, which results in estimated additional common stock of $63 and additional paid-in capital of $375,660. Final equity consideration will be determined at the closing of the merger.


Estimated equity consideration	$	375,723
Assumption of net indebtedness		875,677

Estimated total consideration		1,251,400
Accounts receivable		49,263
Other current assets		15,902
Property and equipment		128,851
Intangible assets		15,000
Deferred tax assets—noncurrent		94,566
Other long-term assets		453
Accounts payable		(5,841	)
Accrued salaries and benefits		(22,777	)
Other accrued liabilities		(21,590	)
Other long-term liabilities		(25,077	)

Fair value of assets acquired and liabilities assumed	$	228,750

Estimated goodwill		1,022,650
Less: historical goodwill		(559,613	)

Goodwill adjustment	$	463,037

The acquired assets and liabilities will be recorded at their relative fair values as of the closing date of the merger. 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 may 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.

(5)	The sources and uses of cash in connection with the December 2014 credit facility amendment and merger with CRC are expected to be as follows:


Sources relating to December 2014 credit facility amendment:
Incremental term A loans	$	235,000

Total sources	$	235,000

Uses:
Existing revolver paydown	$	(164,000	)
Incremental term A loans debt financing costs		(1,900	)
Cash proceeds		(69,100	)

Total uses	$	(235,000	)

Sources relating to merger with CRC:
New unsecured senior notes	$	300,000
New term B loans		500,000
Equity issuance to CRC stockholders(a)		375,723
CRC cash on hand		16,112
Revolver borrowing		62,558
Acadia cash on hand		69,100

Total sources	$	1,323,493

Uses:
Equity issuance to CRC stockholders(a)		(375,723	)
CRC debt repayment		(889,377	)
CRC debt prepayment fees		(9,000	)
CRC accrued interest payoff		(7,412	)
Debt financing costs		(23,250	)
Acquisition costs(b)		(18,731	)

Total uses	$	(1,323,493	)

(a)

Assumes the issuance of 6,262,046 shares of Acadia common stock with a par value of $0.01 at an assumed value of $60.00 per share in exchange for all outstanding CRC securities. Non-accredited stockholders of CRC will receive cash in lieu of Acadia common stock.

(b)

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 nine months ended September 30, 2014 and 2013.

(6)	Represents the $7,412 payoff of CRC’s accrued interest and the following adjustments to long-term debt:


	Current Portion			Long-term Portion			Total Debt
Incremental term A loans	$	11,750		$	223,250		$	235,000
Revolving line of credit paydown		—			(164,000	)		(164,000	)
Elimination of debt not assumed		(4,709	)		(874,669	)		(879,378	)
New unsecured senior notes		—			300,000			300,000
New term B loans		5,000			495,000			500,000
Revolving line of credit borrowing		—			62,558			62,558

Adjustments	$	12,041		$	42,139		$	54,180

(7)	The amounts in this column represent pro forma adjustments for Acadia’s completed acquisitions of (a) two facilities from United Medical Corporation, (b) Cascade Behavioral Hospital and (c) McCallum Place (none of which were individually material) up to the acquisition dates.

(8)

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
Year ended December 31, 2013	Average Spot Rate	$	1.5643
Six months ended June 30, 2014	Average Spot Rate	$	1.6687
Nine months ended September 30, 2013	Average Spot Rate	$	1.5461

(a)

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	)		(10	)		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			(10	)		13,535			21,173
Interest expense, net		61,782			(12,320	)		(10	)		49,462			77,373
Transaction-related expenses		—									—			—

Total expenses		201,441			(11,744	)					189,697			296,743
(Loss) income from continuing operations before income taxes		(30,745	)		11,744						(19,001	)		(29,723	)
Benefit for income taxes		(1,715	)		(6,496	)		(10	)		(8,211	)		(12,844	)

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

(b)

The amounts below represent results for the six months ended June 30, 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	£	85,283		£						£	85,283		$	142,312
Provision for doubtful accounts		2									2			3

Revenue		85,285									85,285			142,315
Salaries, wages and benefits		51,601			(878	)		(10	)		50,723			84,641
Professional fees		4,037									4,037			6,737
Supplies		2,917									2,917			4,868
Rents and leases		545									545			909
Other operating expenses		6,978									6,978			11,644
Depreciation and amortization		5,991			1,039			(10	)		7,030			11,731
Interest expense, net		31,979			(6,160	)		(10	)		25,819			43,084
Transaction-related expenses		—									—			—

Total expenses		104,048			(5,999	)					98,049			163,614
(Loss) income from continuing operations before income taxes		(18,763	)		5,999						(12,764	)		(21,299	)
(Benefit) provision for income taxes		(1,063	)		1,081			(10	)		18			30

Loss from continuing operations	£	(17,700	)	£	4,918					£	(12,782	)	$	(21,329	)

(c)

The amounts below represent results for the nine months ended September 30, 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	£	127,882		£						£	127,882		$	197,718
Provision for doubtful accounts		(21	)								(21	)		(32	)

Revenue		127,861									127,861			197,686
Salaries, wages and benefits		73,971			(1,126	)		(10	)		72,845			112,626
Professional fees		5,650									5,650			8,735
Supplies		4,670									4,670			7,220
Rents and leases		767									767			1,186
Other operating expenses		10,600									10,600			16,389
Depreciation and amortization		8,515			1,559			(10	)		10,074			15,575
Interest expense, net		46,159			(9,240	)		(10	)		36,919			57,080
Transaction-related expenses		—									—			—

Total expenses		150,332			(8,807	)					141,525			218,811
(Loss) income from continuing operations before income taxes		(22,471	)		8,807						(13,664	)		(21,125	)
Benefit for income taxes		(1,254	)		(4,872	)		(10	)		(6,126	)		(9,471	)

Loss from continuing operations	£	(21,217	)	£	13,679					£	(7,538	)	$	(11,654	)

(9)	The amounts in this column represent, for Habit, actual results, up to the acquisition date, for the periods presented.

(10)

Reflects adjustments to reconcile U.K. GAAP to U.S. GAAP 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.

(11)	Represents the adjustments to 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)

Partnerships in Care


	Amount		Useful Lives (in years)		Monthly Depreciation		Year Ended December 31, 2013			Nine Months Ended September 30, 2014			Nine Months Ended September 30, 2013
Land	$	78,913		N/A	$	—	$	—		$	—		$	—
Building and improvements		478,604		30-50		1,046		11,765			6,275			8,721
Equipment		20,713		3-10		354		3,988			2,127			2,956

		578,230				1,400		15,753			8,402			11,677
Indefinite-lived intangible assets		3,000		N/A		—		—			—			—

Total depreciation and amortization expense								15,753			8,402			11,677
Less: historical depreciation and amortization expense								(21,173	)		(11,731	)		(15,575	)

Depreciation and amortization expense adjustment							$	(5,420	)	$	(3,329	)	$	(3,898	)

(b)

CRC and Habit


	Amount		Useful Lives (in years)		Monthly Depreciation		Year Ended December 31, 2013			Nine Months Ended September 30, 2014			Nine Months Ended September 30, 2013
Land	$	20,983		N/A	$	—	$	—		$	—		$	—
Building and improvements		81,526		10-40		878		10,536			7,902			7,902
Equipment		18,828		3-10		438		5,256			3,942			3,942
Construction in progress		7,514		N/A		—		—			—			—

		128,851				1,316		15,792			11,844			11,844
Indefinite-lived intangible assets		15,000		N/A		—		—			—			—

		15,000				—		—			—			—
Total depreciation and amortization expense								15,792			11,844			11,844
Less: historical depreciation and amortization expense of CRC								(19,398	)		(15,352	)		(14,363	)
Less: historical depreciation and amortization expense of Habit								(1,930	)		(381	)		(1,448	)

Depreciation and amortization expense adjustment							$	(5,536	)	$	(3,889	)	$	(3,967	)

(12)	Represents an adjustment to interest expense to give effect to the following transactions:

(a)

Partnerships in Care


	Year Ended December 31, 2013			Nine Months Ended September 30, 2014			Nine Months Ended September 30, 2013
Interest related to 5.125% Senior Notes due 2022	$	15,375		$	7,688		$	11,531
Interest related to borrowings on revolving credit facility		450			225			337
Interest related to amortization of deferred financing costs		1,116			558			837
Less: historical interest expense of Partnerships in Care		(77,373	)		(43,084	)		(57,080	)

Interest expense adjustment	$	(60,432	)	$	(34,613	)	$	(44,375	)

(b)

CRC, assuming an estimated interest rate of 5.1% related to the new debt.


	Year Ended December 31, 2013			Nine Months Ended September 30, 2014			Nine Months Ended September 30, 2013
Interest related to new unsecured senior notes	$	18,000		$	13,500		$	13,500
Interest related to incremental term A loans		8,225			6,169			6,169
Interest related to new term B loans		22,500			16,875			16,875
Interest related to change in the applicable interest rate on term A loans based on Acadia’s consolidated leverage ratio		1,146			859			859
Interest related to revolving line of credit paydown, net of borrowing		(3,049	)		(2,287	)		(2,287	)
Interest related to amortization of deferred financing costs		3,593			2,695			2,695
Less: historical interest expense of CRC		(70,699	)		(54,455	)		(52,791	)
Less: historical interest expense of Habit		(575	)		(89	)		(431	)

Interest expense adjustment	$	(20,859	)	$	(16,733	)	$	(15,411	)

An increase or decrease of 0.125% in the assumed interest rate related to the new unsecured senior notes and new term B loans would result in a change of $1.0 million, $0.8 million and $0.8 million for the year ended December 31, 2013 and nine months ended September 30, 2014 and 2013, respectively.

(13)	Reflects the removal of acquisition-related expenses, related to CRC, included in the historical statements of operations.

(14)	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.

(15)	Represents adjustments to weighted average shares used to compute basic and diluted earnings per share for the following.

(a)

To reflect the effect of 8,881,794 shares of common stock issued by Acadia, which resulted in an increase in the weighted average shares outstanding of 8,881,794 for the year ended December 31, 2013 and nine months ended September 30, 2014 and 2013 on a pro forma basis. The proceeds of Acadia’s offering of such common stock were used to partially fund Acadia’s acquisition of Partnerships in Care on July 1, 2014.

(b)

To reflect the effect of an estimated 6,262,046 shares of common stock to be issued by Acadia.

(16)	Reflects reclassification of CRC provision for doubtful accounts to conform to Acadia historical presentation.

Attached files

Acadia Healthcare Company, Inc. Reports

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