Financial Analysis

8. Commitments and Contingencies Professional and General Liability The Company is subject to medical malpractice and other lawsuits due to the nature of the services the Company provides. A portion of the Companys professional liability risks are insured through a wholly-owned insurance subsidiary providing coverage for up to $ 10.0 million per claim, $ 15.0 million for certain other claims and $ 25.0 million for certain batched claims through August 31, 2025 and $ 15.0 million per claim and $ 25.0 million for certain batched claims thereafter. The Company has obtained reinsurance coverage from a third-party to cover claims in excess of those limits. The reinsurance policy has a coverage limit of $ 80.0 million or $ 75.0 million in the aggregate for certain other claims through August 31, 2025 and $ 75.0 million in the aggregate for claims thereafter, with exclusions for certain types of incidents. The Companys reinsurance receivables are recognized consistent with the related liabilities and include known claims and any incurred but not reported claims that are covered by current insurance policies in place. The reserve for professional and general liability risks was estimated based on historical claims, prior settlements and judgments, industry trends, severity factors, and other actuarial assumptions. The estimated accrual for professional and general liabilities could be significantly affected should current and future occurrences differ from historical claim trends and …

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13. Equity-Based Compensation Equity Incentive Plans The Company issues stock-based awards, including stock options, restricted stock awards and performance stock units, to certain officers, employees and non-employee directors under the Acadia Healthcare Company, Inc. Amended and Restated Incentive Compensation Plan (the Equity Incentive Plan). At June 30, 2026, a maximum of 18,175,000 shares of the Companys common stock were authorized for issuance as stock options, restricted stock awards and performance stock units or other share-based compensation under the Equity Incentive Plan, of which 4,774,690 were available for future grant. Stock options may be granted for terms of up to ten years . The Company recognizes expense on all share-based awards on a straight-line basis over the requisite service period of the entire award. Grants to employees generally vest in annual increments of 25 % or 33 % each year, commencing one year after the date of grant. The exercise prices of stock options are equal to the closing price of the Companys common stock on the most recent trading date prior to the date of grant. The Company recognized $ 11.0 million and $ 10.5 million in equity-based compensation expense for the three months ended June 30, 2026 and 2025, respectively, and $ 18.9 million and $ 19.2 million for the six months ended June 30, 2026 and 2025, respectively. Stock compensation expense for the three and six months ended June 30, 2026 and 2025 is impacted by forfeiture adj …

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17. Fair Value Measurements The carrying amounts reported for cash and cash equivalents, accounts receivable, other current assets, accounts payable and other current liabilities approximate fair value because of the short-term maturity of these instruments. The carrying amounts and fair values of the Credit Facility and the Senior Notes at June 30, 2026 and December 31, 2025 were as follows (in thousands): Carrying Amount Fair Value June 30, 2026 December 31, 2025 June 30, 2026 December 31, 2025 Credit Facility $ 951,114 $ 1,037,816 $ 951,114 $ 1,037,816 5.500% Senior Notes due 2028 $ 447,876 $ 447,382 $ 444,607 $ 443,400 5.000% Senior Notes due 2029 $ 472,372 $ 471,946 $ 464,531 $ 453,540 7.375% Senior Notes due 2033 $ 543,207 $ 542,823 $ 559,069 $ 545,537 The Credit Facility and the Senior Notes were categorized as Level 2 in the GAAP fair value hierarchy. Fair values were based on trading activity among the Companys lenders and the average bid and ask price as determined using published rates. …

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7. Goodwill and Other Intangible Assets Goodwill The changes in goodwill during 2025 and 2026 are as follows (in thousands): Balance at January 1, 2025 $ 2,264,851 Increase from acquisitions 27,691 Decrease from impairment of goodwill ( 996,200 ) Balance at December 31, 2025 1,296,342 Increase from acquisitions 6,930 Balance at June 30, 2026 $ 1,303,272 Other Intangible Assets Other identifiable intangible assets consisted of the following (in thousands): June 30, 2026 December 31, 2025 Licenses and accreditations $ 11,778 $ 11,788 Trade names 58,227 54,726 Certificates of need 30,181 30,158 Total $ 100,186 $ 96,672 All of the Companys definite-lived intangible assets are fully amortized. The Companys licenses and accreditations, trade names and certificates of need have indefinite lives and are, therefore, not subject to amortization. …

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16. Income Taxes The provision for income taxes for the three months ended June 30, 2026 and 2025 reflects effective tax rates of 44.3 % and 24.1 % , respectively, and 49.3 % and 26.0 % for the six months ended June 30, 2026 and 2025, respectively. The increase in the effective tax rate for the three months ended June 30, 2026 compared to the three months ended June 30, 2025 was primarily attributable to an increase in nondeductible legal settlements and an increase in valuation allowances against certain state deferred tax assets in the current year. As the Company continues to monitor the implications of potential tax legislation in each of its jurisdictions, the Company may adjust estimates and record additional amounts for tax assets and liabilities. Any adjustments to the Companys tax assets and liabilities could materially impact the provision for income taxes and its effective tax rate in the periods in which they are made. …

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10. Long-Term Debt Long-term debt consisted of the following (in thousands): June 30, 2026 December 31, 2025 Credit Facility: Term Loan A $ 625,625 $ 637,813 Revolving Line of Credit 329,000 404,000 5.500 % Senior Notes due 2028 450,000 450,000 5.000 % Senior Notes due 2029 475,000 475,000 7.375 % Senior Notes due 2033 550,000 550,000 Less: unamortized debt issuance costs, discount and premium ( 15,056 ) ( 16,846 ) 2,414,569 2,499,967 Less: current portion ( 32,500 ) ( 28,438 ) Long-term debt $ 2,382,069 $ 2,471,529 Credit Facility On February 28, 2025 (the Credit Facility Closing Date), the Company entered into a new credit agreement (the Credit Agreement), which provides for a $ 1.0 billion senior secured revolving credit facility (including a $ 50.0 million sublimit for the issuance of letters of credit and a $ 50.0 million swingline subfacility) (the Revolving Facility) and a $ 650.0 million senior secured term loan facility (the Term Loan Facility, and, together with the Revolving Facility, the Credit Facility), each maturing on February 28, 2030 . On the Credit Facility Closing Date, the full $ 650.0 million amount of the Term Loan Facility was funded, and $ 550.0 million was funded under the Revolving Facility, which amounts were used, among other things, to refinance the outstanding obligations under the Prior Credit Facility (as defined below). Borrowings under the Credit Agreement bear interest at a floating rate equal to, at the Companys option, either (i) a Secure …

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3. Revenue Revenue is primarily derived from services rendered to patients for inpatient psychiatric and substance abuse care, outpatient psychiatric care and residential treatment. The services provided by the Company have no fixed duration and can be terminated by the patient or the facility at any time, and therefore, each treatment is its own stand-alone contract. Services ordered by a healthcare provider in an episode of care are not separately identifiable and therefore have been combined into a single performance obligation for each contract. The Company recognizes revenue as its performance obligations are completed. The performance obligation is satisfied over time as the customer simultaneously receives and consumes the benefits of the healthcare services provided. For inpatient services, the Company recognizes revenue equally over the patient stay on a daily basis. For outpatient services, the Company recognizes revenue equally over the number of treatments provided in a single episode of care. Typically, patients and third-party payors are billed within several days of the service being performed or the patient being discharged, and payments are due based on contract terms. As the Companys performance obligations relate to contracts with a duration of one year or less, the Company elected the optional exemption in ASC 606-10-50-14(a). Therefore, the Company is not required to disclose the transaction price for the remaining performance obligations at the end of th …

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18. Segments The Company has one reportable segment, behavioral healthcare services. The behavioral healthcare services segment provides inpatient and outpatient behavioral healthcare services. The Company derives revenue from 40 states and Puerto Rico and manages business activities on a consolidated basis. Revenue is primarily derived from services rendered to patients for inpatient psychiatric and substance abuse care, outpatient psychiatric care and adolescent residential treatment. The Companys Chief Operating Decision Maker (CODM) is the Chief Executive Officer . The CODM assesses performance for the behavioral healthcare services segment and decides how to allocate resources based on earnings before interest, income taxes, depreciation and amortization (EBITDA). The CODM reviews expenses in a format consistent with the condensed consolidated statements of income. The measure of segment assets is reported on the balance sheet as total assets. The CODM uses EBITDA to evaluate income generated from segment assets in deciding whether to reinvest assets into the behavioral healthcare services segment or into other parts of the entity, such as for acquisitions or debt reduction. EBITDA is used to monitor budget versus actual results. The CODM also uses EBITDA in competitive analysis by benchmarking to the Companys competitors. The competitive analysis along with the monitoring of budgeted versus actual results are used in assessing performance of the segment and in establish …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing