Q3 2022 Acadia Healthcare Company Inc Earnings Call
And welcome to Acadia Healthcare's third quarter 2022 earnings conference call.
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I'd now like to turn the conference over to Gretchen Homrich. Please go ahead.
Good morning, and welcome to Acadia <unk> third quarter 2022 conference call I'm, Gretchen Homrich, 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.
This call you'll 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 is expected quarterly and annual financial performance for 2022 and beyond you are hereby cautioned that these statements may be affected by that.
The factors set forth in <unk> 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.
The company undertakes no obligation to update publicly any forward looking statement, 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 our Chief Executive Officer, Chris Hunter.
Thank you rich and 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 will 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 six 9% and an increase in patient days of three 1%.
We continue to experience positive trends in revenue per patient day as we've 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 rates 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.
NAV agate it through the challenges of a tight labor market, while seeking stability and 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 <unk>.
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 we will continue to support future growth.
Additionally, we are 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 is 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, where ctc's to address the critical need for addiction treatment, specifically for patients dealing with opioid use disorder.
During the third quarter, we opened new Ctc's in Indiana, and Florida, bringing our total to four Ctc's open. This year, we expect to meet our objective to open at least six new <unk> 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 and 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 Universities, Sidney Kimmel Medical College in Jefferson.
Health and Philadelphia, Pennsylvania to further teaching in clinical care opportunities for students and behavioral healthcare.
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 in 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 opportunity.
<unk> 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 that 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 Con has been named operations group President of our CTC business and it's growing network of 144 facilities NASA joins Acadia with ex experience as a medical doctor and an operational leader for a large health care system his experience and process.
<unk> 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 was.
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 worked closely with our executive team and board to oversee the execution of <unk> 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 mentioned, 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 key our leadership position in the behavioral health care industry. At this time I will now turn the call.
Over to David Duckworth to discuss our financial results for the quarter.
Thanks, Chris and good morning.
Looking at the third quarter, we delivered strong financial and operating results as we successfully delivered on our key performance metrics through consistent execution of our strategy rare.
Revenue for the third quarter increased 13, 5% to $666 7 million.
Compared with $587 6 million for the third quarter of 2021.
Our revenue growth includes an increase in same facility revenue of 10, 2% compared with the third quarter of 2021.
Our adjusted EBITDA was $162 8 million for the third quarter of 2022, and adjusted income attributable to Acadia stockholders per diluted share was <unk> 86.
The company recorded income of $7 7 million during the third quarter of 2022 related to the provider relief fund established by the cares Act. Excluding this income Acadia is adjusted EBITDA for the third quarter of 2022 was $155 $1 million.
And adjusted income attributable to Acadia stockholders per diluted share was <unk> 80.
For the current period presented in our earnings release adjusted income excludes transaction related expenses and the income tax effect.
During the third quarter the company substantially completed its repayment of the $45 2 million received pursuant to the Medicare accelerated and advanced payment program under the cares Act.
We also repaid the remaining half of the $39 $3 million of 2020 payroll tax deferrals during the third quarter of 2022, which eliminated this liability.
We continue to review the remaining $14 $2 million of the American rescue plan payments held on our balance sheet as of September 32022 for the potential recognition of additional income.
Our guidance does not include the recognition of additional income in the fourth quarter of 2022 beyond the $16 $2 million of provider relief Fund income recorded in the nine months ended September 32022.
Maintaining a strong financial position continues to be a top priority, allowing us the flexibility and capital to support our growth strategy and future investments.
Looking at our balance sheet as of September 32022, the company had $93 $4 million in cash and cash equivalents.
The company had $515 million available under its $600 million revolving credit facility and our net leverage ratio was approximately $2 one as of September 32022.
Moving onto guidance as noted in our press release, we narrowed our previously issued guidance for 2022 as follows.
Revenue in a range of $2 $5 eight to $2 6 billion.
Adjusted EBITDA, including income from the provider relief fund and a range of $611 million to $621 million.
Adjusted EBITDA, excluding income from the provider relief fund and a range of 595 million to $605 million.
Adjusted earnings per diluted share, including income from the provider relief fund and a range of $3 13.
To $3 23.
And adjusted earnings per diluted share excluding income from the provider relief fund and a range of $3 to $3 10.
As a reminder, consistent with previous years, we expect some normal seasonality around the holidays that causes the fourth quarter to typically be $3 million to $5 million lower from an EBITDA perspective.
The company's guidance does not include the impact of any future acquisitions divestitures transaction related expenses or the recognition of additional provider relief fund income for the remainder of 2022.
With that Joe we are ready to open the call for questions.
We will now begin the question and answer session.
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We ask that you please limit yourself to one question and one follow up today.
At this time, we will pause momentarily to assemble our roster.
And our first question here will come from a J rice with credit Suisse. Please go ahead.
Hi, everybody.
Thanks for the question first just ask on your labor dynamics.
You seem to be doing.
Better.
Most in dealing with that can you just talk a little bit about the underlying trends youre seeing what kind of.
Wage rate increases your youre contemplating for the year ahead versus if they've been announced.
Versus where you were coming into this year and then also I would love to pursue a little bit more.
High end that Youre, calling out with the academic medical centers and how that may be helping you on the labor front is there any way to talk about.
The extent to which youre recruits are coming out of that pipeline. It's an interesting aspect it hasn't been highlighted before I don't think.
Yes.
Sure. Thanks AJ. This is Chris why don't I start and I'll, let David also weigh in.
I'd say overall, our wage inflation is still a little bit elevated when you look at historical levels. So we've been running in the 5% to 7% range for most of the year.
And it really does continue to vary by job category position and also market I'd say, it's been a goal for us for some time to continue to just try to be as competitive as we can in our markets with our pay rates and we've had to be proactive with certain market adjustments when.
<unk> I think particularly when there has been an opportunity for us to take on census, and we've had staffing shortages, we've really tried to.
Do everything we can to attract staff. So there there are some markets where wage increases are a little bit above that average overall, but I would say contract labor.
For the quarter was pretty stable, it's still less than 2% of overall labor hours and I would say premium pay has remained pretty stable throughout the year.
But it is at elevated levels.
That we believe will moderate over time.
So.
Yes, and then.
And then a J, we're not providing I guess at this point any specific commentary around.
Our outlook for next year.
I'll add though historically for a number of years, we saw wage inflation in the 3% to 4% range pretty consistently and so being in the 5% to 7% range. This year is certainly higher than what we've seen in the past and our our thought is that over the long term we might see some moderation.
And that wage inflation that we've seen this year.
And then with respect to the affiliation that we announced in the release and was included in some releases earlier in the month. We are excited about that we always when we open a new joint venture we're looking at opportunities to get involved in the training of future clinician.
And we can do that through joint ventures, and other relationships, but also through this affiliation that we announced with our Belmont facility in Philadelphia.
It's hard to size that right now, but we continue to find ways in many different markets too.
To improve the training of future clinicians and play whatever role we can play in that which we believe will help the industry and Acadia over the long term.
Okay, maybe just one follow up if I could on the.
Comments around the CTC additions and that's obviously become increasingly southern youre highlighting.
Those subject to certificate of need requirements and most of the certificate of need states and.
Can you just comment on how big an opportunity I know you are adding a few.
Each year. So this year is.
Is there a pipeline of those that go on for quite a while.
Give us a little more about how you are thinking about growing those those new developments in the <unk> on the CTC side.
Yes.
Yes, a J.
The requirements do differ by state, but increasingly we're finding that most states have some process that we go through and navigate with the state whether it set up as part of the C O N or some type of licensing and in many cases.
And RFP like process that we may go through with the state in certain markets within the state.
We do have a very strong pipeline of future CTC locations. We still believe there is a significant need and very low percentage of people that need treatment that are currently getting treatment.
So that is a tailwind that we think will continue to support future CTC de novo's.
We have a.
I would say very refined and detailed process that we are going through to identify those markets. We have a lot of data within the company as to.
Our own patience and.
Where there might be at a real precise level within our markets.
New market a need for a clinic, where our clinic does not already exist.
So we use that among other tools as we identify markets that need a CTC de novo and we're looking at we've already seen an acceleration in the number of CTC de Novo's. If you look back over the last several years, but.
But we continue to look ahead and believe we will see ongoing acceleration and that de novo opportunity.
Our next question will come from Andrew Mok with UBS. Please go ahead.
Hi, Good morning, same sort of revenue per patient day was up another 7% in the quarter, continuing very strong pricing trends first what impact at all the new <unk> that you opened in the third quarter of 'twenty, one have on that metric and secondly can you help us understand the underlying Medicaid rate increases that you are receiving is there.
Any difference in the rates that youre seeing between managed Medicaid in fee for service Medicaid.
Yeah. Good morning, Andrew the CTC impact on the revenue per day of I know, we've talked in previous quarters about how our non inpatient revenue can impact the revenue per day metric.
We continue to see another quarter, where revenue growth for outpatient and our CTC business was in line with our overall same facility revenue growth for the most part.
At around that 10% level.
So because of that.
<unk> impact on the revenue per day growth metric was minimal this quarter. The key driver for our revenue per day growth throughout the year and for the third quarter continues to be payer rate increases that we're seeing.
Broadly across our service lines and across many of our markets and Payors.
So the CTC impact was very small in terms of Medicaid rates.
Medicaid is 50% of our business overall, and we have seen in many markets a good rate increase this year for many of our states in Medicaid payers.
Of course, there's always opportunity in inflation and other factors, where we continue to.
To talk about future rate increases, especially in certain markets.
But we have been pleased with many of our increases that we've seen over the last year and most within our acute service line. Most of our revenue is now with a managed Medicaid payer around 90% of Medicaid business that we see in the acute.
Service line is with some type of managed Medicaid payer within the state.
And we see for the most part.
A pretty close correlation between any Medicaid rates and the managed Medicaid rates that we get within the state, but the vast majority of it at this point is with a managed Medicaid payer.
Got it that's helpful. And then Capex guide was reduced another $30 million this quarter and now down I think $85 million from initial expectations driven entirely by growth Capex can you walk us through the drivers of the Capex cuts this year and help us understand how much of this is discretionary eidur end and how much it is.
Driven by supply chain issues.
Yes, we have reduced the projected capex for this year and if you remember at the beginning of the year.
We had visibility as to the projects that would begin at some point.
But we made assumptions around when those projects with break ground and begin construction, which is really the point, where we're able to have a <unk>.
Higher level of confidence in the timing of the forecast.
And so we did see a number of projects because of.
Approvals in the breaking ground and all that it takes to get to that point in the project. We saw some delays compared to the estimates that we initially made at the beginning of the year.
We have seen some step up over the course of the year as several of those projects have begun.
But did not see all of those projects that we hope to break ground during the year actually get to that point.
As we look ahead to next year, we do see that ramp up continuing that ramp up we thought might happen in the back half of this year, we do see that happening next year. So we would attribute.
All of that reduction to just the timing of the projects.
And do feel like as we move into next year. We will we will provide more clarity on just the timing of that step up but we do still believe that step up will happen.
For this quarter. If you look at our Capex, we were around $60 million of our Capex was related to those expansion projects. We still believe that will step up to the $75 million to $100 million range.
And we will provide more detail later as to when that happens.
Our next question will come from Brian <unk> with Jefferies. Please go ahead.
Hey, good morning.
David just to follow up on Andrew's first question. So as I think about the discussions you guys are having with the payers and obviously, 50% of your business is managed Medicaid and managed Medicaid heavy.
What is driving their decision or your lobbying point leverage point to get you a fairly healthy rate increases and how should we be thinking about the sustainability of this.
This kind of rate growth.
Yeah.
Well, there's a number of factors Brian and.
I mean first of all I believe given the strong demand and the importance and value of the treatment of behavioral health care needs.
There is an increasing recognition of just the importance and the value that's provided in intervening in providing that coverage.
And our team does a great job of telling that story.
And making sure within our states and with our payers that they understand the programs that we provide and we work proactively and closely with those payers.
On the programs that we provide and the team's done a nice job just maintaining those relationships. It is a very market and payer specific approach.
While we are pleased with the positive trend in the consistent trend in that metric.
We think there is an ongoing opportunity. There is there is still some payers, where we have a greater challenge than other payers just getting what we believe is an appropriate rate increase.
So we will continue our initiatives around these opportunities.
It is difficult to forecast ahead on this metric because we were at a lower trend for a number of years and didn't really see the consistency that we're now seeing across the different payers and markets.
We'll continue to provide more information around our outlook for revenue per day.
I would describe it as remaining somewhat cautious knowing the longer term historical trend, but also believing that we have.
A number of initiatives in place and opportunities we believe to continue to drive a positive result, there.
I appreciate that and then Chris in your press release, you talked about the different growth drivers and acquisitions.
Just wanted to hear your thoughts and what Youre seeing in the market today.
Deal opportunities, especially with the rising rate environment Thats in theory squeezing out the p/e guys, a little bit and then maybe related to that David just maybe if you can remind us what you think your optimal cap structure leverage going forward.
Yes.
Brian One thing I would add to David's prior remarks, just coming from the payer side I'd just been extremely impressed with how methodical.
Team has been on our managed care front in terms of just building these relationships over time, but just continuing to work with the payers day in and day out.
We have very strong visibility right now about half of our contracted rate changes are already set for 2003. So there's still work to do in the fourth quarter that they are continuing to.
To work through on your question on the M&A front in this environment.
To believe that and I think we all believe that we're going to see more opportunity I mean, given our strong balance sheet.
Given the fragmentation of this market there are more.
Many smaller players that I think we will.
Look to a partner over the next several years and I. Just think we are so well positioned not only as the largest pure play provider of behavioral health, but also the strength of our balance sheet certainty of close.
Our desire to get some of these M&A transactions done. So I do think that the pipeline is just going to continue to grow I mean, we certainly are having conversations.
Out their valuation expectations.
From a year ago continue to be pretty high, but we're going to continue to monitor that over time and we just think we have the.
The ability to be patient, we have multiple levers to deploy capital and we're going to continue to be disciplined.
Yes.
Add to that Brian we are at a leverage level right now at two one that is lower than we believe the company may.
<unk> operated at longer term, which is probably more like three to three and a half.
Depending on the opportunities that we will have over the long term.
But we certainly have a significant amount of capacity and flexibility right now and as Chris said, we're happy to have that flexibility. We have a lot of different ways that we can grow and we will continue to be disciplined and evaluate those opportunities based on a market specific approach and what's best in each of.
Our service lines and markets.
Our next question will come from <unk> Mayo with SBB Securities. Please go ahead.
Hey, Thanks, Good morning, Dave.
David can you talk about the startup losses in the quarter and how those were tracking relative to expectations.
Presumably that may influence the consolidated SWT number a little bit so any color would be helpful.
Yes, we did open two facilities are joint venture in Tennessee, as well as the children's facility in Chicago in early June and so we always talk about how the timing of our new facility openings could impact that.
Level of startup losses that we have in any given quarter.
And we typically expect for a year to be in the $15 million to $20 million range.
For startup losses.
And with those two openings happening in July and basically spending the entire quarter going through the survey and licensing in the early phase of the opening process we.
We did see around $5 million.
In startup losses, this quarter, which we would say is at the higher end of the range that we expect not above our expectations, but maybe at the higher end of our expected range.
And that did impact the.
<unk> as a percentage of revenue metric.
Because we are building the team and staff at those facilities.
Not able to really get paid by the payers until we complete that survey process.
And so we saw I think 70 basis points.
Of an increase in our overall <unk> as a percentage of revenue.
And if you look at our same facility growth group, we saw stability, there and really on a year over year and quarter to quarter basis saw that metric be stable. So we would attribute the increase that we saw mostly to those startup activities.
We've also continued the integration of the Centerpoint acquisition that was completed at the end of the year.
It continues to be a good facility. Our team is doing a great job integrating that facility, but it's under it's underperformed our expectations for the quarter.
And there is a lot of initiatives that we have in place.
<unk> to the team and just further integration into Acadia that we believe will improve their operations.
But it's a little bit slow to start as we move through the year a good opportunity for next year just to see the full benefit of.
The performance of those facilities under Acadia.
But between the startup losses and those facilities, we did see a little bit more of a drag to the same facility growth this quarter and getting to our overall consolidated numbers.
Can you share what your same store <unk> per patient day growth rate was in the quarter that might just be helpful. We can't really see that until your Q comes out.
Yes, if you think about it so the metrics. We just talked about were salaries as a percentage of revenue right. If you didn't if you didn't look at salaries per patient day.
Which.
Of course incorporates volume growth into that metric, but.
It was around the same level of our wage inflation, if you look at that metric.
So right in that we've talked about that being 5% to 7% throughout this year and thats around what we saw this quarter so sort of that.
Mid single digits, a little bit over 5% is where we trended this quarter and throughout the year.
Okay, and maybe just one last one here it looks like again, there was another maybe small divestiture in the quarter, 6% to $7 million of divested revenue just remind us what what that is it does feel like that may have negatively impacted length of stay by 20 basis points or so you reported the prior year comp of 15 three.
This quarter, but you reported <unk> five so just want to make sure I'm I'm thinking about the impact there correctly. Thanks.
Yes that would play a role in what we reported last year compared to this year and we closed.
Our residential facility and one of our markets in early July .
Facility. It was unfortunate that we had to close that facility, but it was underperforming and just.
Not the level of referrals and support within that market that we needed to be successful in that market. So it was not a significant financial impact at the EBITDA level.
But certainly there was some revenue and some beds associated with that facility.
There was around a $1 million of losses related to that this quarter that.
Was not expected at the beginning of the year.
For the most part we've done a nice job just getting through the closure process winding down operations at that facility.
Our next question will come from Kevin Fischbeck with Bank of America. Please go ahead.
Great. Thanks, I wanted to go back to labor for a minute just because.
Your performance all this year has really been a differentiator almost every company has taken down numbers either margin or top line because of flavor and you guys seem to be managing it well and we don't normally think of.
Behavioral health is at a place that's kind of easy to recruit into in the first place.
I know.
From your perspective.
What's been driving your ability to source.
Labor is it as simple as you are well positioned to get strong rate growth and so passing on 5% to 7% wage growth is a lot easier when your rates are growing 7%.
Or is there something else you would point to.
Show, how well we've been managing through this.
Okay.
Yes. This is Chris I would say, it's several things I mean, I think clearly we've tried to as I said before.
To be proactive with respect to market adjustments when necessary I think we also have been very methodical of working with our HR team and the individual facilities, where there is an expectation that when they have staffing challenges or headwinds that they are immediately raising those and we're working.
Really literally on a daily basis as.
As a leadership team to ensure that they're getting the resources that they need and so it's really been market by market and I think it's more just a culture that we're trying to do everything.
We possibly can to.
To deal with.
Some of the labor challenges, particularly since we see such strong demand and we don't want to have to turn away patients because we can't staff.
At the at the local individual facility level. So we will continue to be very focused on it I wouldn't say that there's one panacea I think it's just.
Really strong and methodical management.
Alright, great. Thanks, and then I guess with your 10% same store I.
My guess is that overall the growth by service line is going to be dependent to some degree by how quickly youre opening up capacity by service lines, but can you give us any kind of directional color about which service lines might be growing a bit faster than 10% of which ones might be going a little slower than the 10% overall growth.
Okay.
Yes, Kevin we certainly continue to see strong performance in the acute service line, especially if you look outside of the same facility group at an overall level knowing that the acquisition we completed at the end of the year.
Added about 3%, 3% to 4% revenue growth for the company that was all in the acute service line.
Within the same facility group, though we're seeing good revenue growth and performance across all of our service lines.
Rate increases and volume have grown in each of the service lines.
And so we didn't necessarily highlight within the same facility performance any specific service line. They are all <unk>.
Added beds and added programs across the service lines and done a nice job growing both on the volume and the rate side.
If you look back over time, we've probably had more bed additions in the acute service line.
Than any other service line and then second would be specialty.
So the RTC business is probably growing at a slightly lower rate, but we're pleased with the revenue growth and the performance across all the service lines.
Our next question today will come from <unk> Chickering with Deutsche Bank. Please go ahead.
Hey, good morning, guys. Thanks for taking my questions I'm, a stick fees all actually on the CVC business, especially with the new hire you guys made there.
First one is you said that the growth rate for CVC was the same as your overall growth can you just remind us what percent of revenues today comes from CDC.
Yes, yes, <unk>, we have for the CTC business.
Hold on so I can give you.
Precise number.
We continue to see its around if we were to just give you a <unk>.
Rounded annual number around the $400 million level.
Okay got it and this has been growing last couple of years basically in line with overall revenues right.
Yes, it has and we have the de novo's that are a key driver of that growth.
But we also have.
<unk>.
At our existing sites, we always like to have capacity at our existing sites to treat more patients and then the.
The payer mix and the rate increases in that space as I mentioned a minute ago have also grown.
Okay, and then on a reimbursed spin I know, it's a state by state how much variability is there between what you paid per week per patient and the lowest lowest things days for us the highest paying states.
We look at it on the basis of rate increases that we're seeing across the state.
And as we said earlier believe that.
We're broadly seeing success this year across our service lines and then within <unk>.
Each of our service lines, if we look at our operations in different states.
We're in 22 different states for our acute business, we're seeing broadly.
Good rate increases across the states. There is variability of course in the rates, we get in one market compared to another market.
Just with the significant cost differences within our country.
So.
That's not a metric that we typically provide but we're focused on where the rate growth can happen and consistency in that rate great growth across those markets.
Okay.
Two more quick questions.
I believe you said before just confirming that the margins for CVC are identical to corporate averages.
And any plans to sort of segment reporting the separate divisions you guys. Thanks.
Thanks, so much.
Yes, we have said before that the margin profile for our facilities and service lines.
Can vary from one market to another and one facility to another there's just so many factors that play a part in that the maturity of our facility the size of the facility.
And a number of other operational factors relating to the reimbursement and the cost structure.
But overall, if we look at the service lines.
We do see.
Not identical, but a lot of similarities in our margins across all of those service lines. If you think about it as an average in a range within the facilities that that make up that service line.
Your second question there or your fourth question was about segment reporting.
And we have considered that of course, we're a U S. Only company now, but given the way we operate our facilities and really.
They are all run as part of our group.
It is something that we continue to evaluate every year, especially if theres any type of changes in the way, we manage those facilities or other factors that we need to consider that impact the way. We report those service lines, but it's a good question and one that we continue to look at and we'll continue to update you on.
Our next question will come from John Ransom with Raymond James. Please go ahead.
Hey, there.
Just looking forward to the analyst day, sorry, guys.
Looking forward to the analyst day.
At a high level.
Plan to address.
The multiyear growth outlook and the math to get there.
And then secondly, kind of unrelated question, you've hired a new head of strategy, what's going to be different a couple of years from now.
As a result of that higher if anything compared to sort of how the company has operated in the past. Thanks.
Yes. Thanks, John This is Chris a few things I would say on that I would say first of all we think the Investor day is a great opportunity for us to talk about the lines of business.
And a little bit more depth than we've been able to obviously, we speak on these quarterly calls and the analyst meetings on our growth pathways and how we're executing against that strategy.
But I think there is an opportunity for us to go a little bit deeper and certainly to link that to the financial plan.
Because we have significant confidence not only in our ability to grow but also the visibility that we have frequently with these JV. So we will certainly be laying that out.
As it relates to.
Hiring a head of strategy and Andrew Lynch.
I think one of the things that will be different as we will increasingly be looking for ways.
For the various lines of business to be a little bit more integrated and I think thats that already has been a focus here in the last several quarters, but it is something that we'll talk a little bit more about at Investor day going forward, particularly on the referral front and then I think also just our.
<unk> to innovate and to.
Be open to partnerships as a way to really build from the core and leverage technology to continue to advance the business.
Think there's some real things that we were looking for and bringing in some outside expertise that can help us.
Further extend our capabilities there and Andrew just has tremendous experience in that regard.
Thanks, a lot.
Our next question will come from Sarah James with Barclays. Please go ahead.
Thank you.
At the pacing of bed adds in 'twenty two.
<unk> 28, 50 132.
And that implies about 30 de novo and expansion for for Q.
Question should we think about seasonality pattern and bed adds in 'twenty, two being something that could recur.
Respect David Guide for 'twenty, three 'twenty four of 802 1100 ads.
And then on the <unk> call.
I think you guys said guide for <unk> at about 150 beds, but it came in a little shy and just wondering if you can give us some.
Context.
The scale of timing variance. There is this expansion that moved a few days or weeks and just spill into Q.
Or are there more material changes in timing.
Okay.
Yes, Sarah Good question. This is David on the timing of that and there is not any seasonality associated with it.
Any given year.
Just with our I guess, our number of projects, especially on the new facility side.
We can see those sort of line up into a certain quarter of the year.
So as we project forward, we don't expect that same type of seasonality going into future periods.
And then with our third quarter, we did I don't know on the call in the second quarter or if it was subsequent to the call. We did talk about several of those third quarter projects being late in the third quarter and perhaps early in the fourth quarter, we still have and data at the time a strong.
Projection of bed ads for the fourth quarter as well.
And so the the type of change and delay that we saw was in the scale of weeks and not months, we still have.
Those projects that did not come online in the third quarter coming online here in the fourth quarter and the fourth quarter is a strong number just as the third quarter was those should be the projects.
That really position us well going into next year in terms of a key driver of our same facility volume growth.
Great and then just to follow up on your first response is there's no real seasonality to bed adds.
Think about them coming on as a baseline just ratably throughout the year is that a fair assumption.
Yes, it's a fair assumption and I think we could provide updates.
As we talk about an individual year as to the timing of that but certainly over the long term, we think about it is happening ratably throughout the year.
Alright, thank you.
Thank you Sir.
With no remaining questions, we will conclude our question and answer session.
I would like to turn the conference back over to Chris Hunter for any closing remarks.
Okay before we end the call I just wanted to sincerely. Thank our committed facility leaders clinicians and over 22500 dedicated employees across the country, who have continued to work tirelessly to meet the needs of patients in a safe and effective manner.
And just thanks to you all for being with US This morning and for your interest in Acadia. If you have any additional questions. Please don't hesitate to contact us directly have a great day and thanks, everyone.
Yes.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.
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