10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: September 30, 2012

or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from            to

Commission file number 333-135172

CRC HEALTH CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	73-1650429
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
20400 Stevens Creek Boulevard, Suite 600, Cupertino, California	95014
(Address of principal executive offices)	(Zip code)

(877) 272-8668

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	x	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

The total number of shares of the registrant’s common stock, par value of $0.001 per share, outstanding as of November 13, 2012 was 1,000.

CRC HEALTH CORPORATION

INDEX

			Page No.
Part I.	Financial Information
	Item 1.	Financial Statements (Unaudited)
		Condensed Consolidated Balance Sheets as of September 30, 2012 and December 31, 2011		4
		Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2012 and 2011		5
		Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2012 and 2011		6
		Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2012 and 2011		7
		Notes to Condensed Consolidated Financial Statements		8
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		28
	Item 3.	Quantitative and Qualitative Disclosure About Market Risk		35
	Item 4.	Controls and Procedures		36
Part II.	Other Information
	Item 1.	Legal Proceedings		38
	Item 1A.	Risk Factors		38
	Item 6.	Exhibits		38
Signature				39
Exhibit Index				40

2

Forward-Looking Statements

This Quarterly Report on Form 10-Q, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 2 of Part I of this Quarterly Report, includes or may include “forward-looking statements.” All statements included herein, other than statements of historical fact, may constitute forward-looking statements. In some cases you can identify forward-looking statements by terminology such as “may,” “should” or “could.” Generally, the words “anticipates,” “believes,” “expects,” “intends,” “estimates,” “projects,” “plans” and similar expressions identify forward-looking statements. Although CRC Health Corporation (“CRC”) believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. Important factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements include, among others, the following factors: our substantial indebtedness; unfavorable economic conditions that have and could continue to negatively impact our revenues; the failure to comply with extensive laws and governmental regulations given the highly regulated industry in which we operate and the ever changing nature of these laws and regulations; changes in reimbursement rates for services provided; the significant economic contribution that certain regions and programs have to our operating results; claims and legal actions by patients, students, employees and others; failure to cultivate new, or maintain existing relationships with patient referral sources; competition; shortage in qualified healthcare workers; our employees election of union representation; difficult, costly or unsuccessful integrations of acquisitions; the material weakness in our controls over financial reporting and other risks that are described in “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011 filed on March 30, 2012, and that are otherwise described from time to time in CRC’s Securities and Exchange Commission filings after this Quarterly Report. CRC assumes no obligation and does not intend to update these forward-looking statements.

3

CRC HEALTH CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

SEPTEMBER 30, 2012 AND DECEMBER 31, 2011

(In thousands, except share amounts)

	September 30, 2012			December 31, 2011
Assets
Current assets:
Cash and cash equivalents	$	16,171		$	10,183
Restricted cash		315			328
Accounts receivable (net of allowance for doubtful accounts of $5,171 in 2012 and $6,476 in 2011)		37,423			36,196
Prepaid expenses		5,942			8,372
Other current assets		1,911			2,638
Income taxes receivable		—			516
Deferred income taxes		6,365			6,365
Current assets of discontinued operations		352			1,261
Total current assets		68,479			65,859
Property and equipment (net of accumulated depreciation of $74,563 in 2012 and $64,456 in 2011)		127,246			126,840
Goodwill		518,952			523,792
Other intangible assets, net		297,418			301,347
Other assets, net		21,477			21,119
Total assets	$	1,033,572		$	1,038,957
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	5,978		$	4,994
Accrued liabilities		32,425			32,039
Income taxes payable		8,350			—
Current portion of long-term debt		145			7,050
Other current liabilities		13,086			12,612
Current liabilities of discontinued operations		2,668			2,511
Total current liabilities		62,652			59,206
Long-term debt		588,942			594,629
Other long-term liabilities		8,693			8,331
Long-term liabilities of discontinued operations		6,488			6,797
Deferred income taxes		103,249			105,040
Total liabilities		770,024			774,003
Commitments and contingencies
Stockholders’ equity
Common stock, $0.001 par value - 1,000 shares authorized, issued and outstanding		—			—
Additional paid-in capital		460,478			468,305
Accumulated deficit		(196,930	)		(203,351	)
Total equity		263,548			264,954
Total liabilities and stockholders’ equity	$	1,033,572		$	1,038,957

See notes to unaudited condensed consolidated financial statements.

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CRC HEALTH CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011

(In thousands)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Net client service revenues	$	119,730		$	118,001		$	343,984		$	339,713
Operating expenses:
Salaries and benefits		53,357			51,822			162,093			154,937
Supplies, facilities and other operating costs		34,909			34,873			101,822			100,583
Provision for doubtful accounts		1,908			2,572			5,782			6,426
Depreciation and amortization		4,920			4,991			14,652			14,689
Goodwill and asset impairment		4,840			—			4,840			1,947
Total operating expenses		99,934			94,258			289,189			278,582
Operating income		19,796			23,743			54,795			61,131
Interest expense		(12,481	)		(10,461	)		(36,820	)		(34,757	)
Other income		269			216			763			621
Income from continuing operations before income taxes		7,584			13,498			18,738			26,995
Income tax expense		5,390			6,629			10,117			12,155
Income from continuing operations, net of tax		2,194			6,869			8,621			14,840
Loss from discontinued operations, net of tax		(331	)		(4,119	)		(1,700	)		(8,625	)
Net income		1,863			2,750			6,921			6,215
Net income (loss) attributable to noncontrolling interest		434			—			(500	)		—
Net income attributable to CRC Health Corporation	$	2,297		$	2,750		$	6,421		$	6,215
Amounts attributable to CRC Health Corporation:
Income from continuing operations, net of tax	$	2,628		$	6,869		$	8,121		$	14,840
Discontinued operations, net of tax		(331	)		(4,119	)		(1,700	)		(8,625	)
Net income attributable to CRC Health Corporation	$	2,297		$	2,750		$	6,421		$	6,215

See notes to unaudited condensed consolidated financial statements.

5

CRC HEALTH CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011

(In thousands)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012			2011
Net income	$	1,863	$	2,750	$	6,921		$	6,215
Other comprehensive income:
Net change in unrealized gain on cash flow hedges (net of tax of $1,391)		—		—		—			2,106
Total comprehensive income		1,863		2,750		6,921			8,321
Less: Comprehensive income (loss) attributable to noncontrolling interest		434		—		(500	)		—
Comprehensive income attributable to CRC Health Corporation	$	2,297	$	2,750	$	6,421		$	8,321

See notes to unaudited condensed consolidated financial statements.

6

CRC HEALTH CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011

(In thousands)

	Nine Months Ended September 30,
	2012			2011
Cash flows from operating activities:
Net income	$	6,921		$	6,215
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		14,791			14,753
Amortization of debt discount and capitalized financing costs		4,369			3,043
Goodwill and asset impairment		4,840			4,401
Loss (gain) on disposal of property and equipment		1,022			(125	)
Provision for doubtful accounts		5,917			6,604
Stock-based compensation		1,727			2,060
Deferred income taxes		(1,791	)		—
Other operating activities		—			(38	)
Changes in assets and liabilities:
Restricted cash		13			102
Accounts receivable		(7,014	)		(10,935	)
Prepaid expenses		2,410			2,889
Income taxes receivable and payable		8,865			4,628
Other current assets		729			(246	)
Accounts payable		160			792
Accrued liabilities		842			240
Other current liabilities		422			(767	)
Other long-term assets		(1,186	)		(2,091	)
Other long-term liabilities		51			3,271
Net cash provided by operating activities		43,088			34,796
Cash flows from investing activities:
Additions of property and equipment		(11,328	)		(13,004	)
Proceeds from sale of property and equipment		691			152
Acquisition of non-controlling interest		(500	)		—
Other investing activities		(101	)		(91	)
Net cash used in investing activities		(11,238	)		(12,943	)
Cash flows from financing activities:
Borrowings of long-term debt		84,096			—
Repayment of long-term debt		(88,118	)		(12,609	)
Borrowings on revolving line of credit		18,000			9,500
Repayments on revolving line of credit		(27,500	)		(7,000	)
Capital distributed to Parent		(9,554	)		(3,169	)
Capitalized financing costs		(2,786	)		(1,616	)
Net cash used in financing activities		(25,862	)		(14,894	)
Net increase in cash and cash equivalents		5,988			6,959
Cash and cash equivalents — beginning of period		10,183			7,111
Cash and cash equivalents — end of period	$	16,171		$	14,070
Supplemental disclosure of noncash investing and financing activities:
Purchases of property and equipment included in accounts payable	$	1,264		$	334
Payable related to acquisition	$	48		$	185
Supplemental disclosure of cash flow information:
Cash paid for interest	$	36,099		$	36,558
Cash paid for income taxes, net of refunds	$	1,257		$	2,054

See notes to unaudited condensed consolidated financial statements.

7

CRC HEALTH CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. OVERVIEW AND BASIS OF PRESENTATION

Overview

CRC Health Corporation (“the Company”) is a wholly owned subsidiary of CRC Health Group, Inc., referred to as “the Group” or “the Parent.” The Company is headquartered in Cupertino, California, and through its wholly owned subsidiaries provides treatment services related to substance abuse, troubled youth and other addiction diseases and behavioral disorders.

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X, without audit. Accordingly, they do not include all of the information required by accounting principles generally accepted in the United States of America for annual financial statements. The unaudited condensed consolidated balance sheet as of December 31, 2011 has been derived from our audited financial statements.

In the opinion of management, these unaudited condensed consolidated financial statements contain all adjustments, consisting of normal recurring adjustments, necessary to present fairly the financial position of the Company, its results of operations, and its cash flows. These unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and the notes thereto for the year ended December 31, 2011.

Principles of Consolidation — The Company’s condensed consolidated financial statements include the accounts of CRC Health Corporation and its consolidated subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates — Preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the Company’s condensed consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates.

Reclassifications: Discontinued Operations — The condensed consolidated statements of operations have been reclassified for all periods presented to reflect the presentation of closed or sold facilities as discontinued operations (see Note 11). Unless noted otherwise, discussions in the notes to the condensed consolidated financial statements pertain to continuing operations.

Out of Period Adjustments — Subsequent to the issuance of March 31, 2012 condensed consolidated financial statements, the Company determined that:

• The (i) condensed consolidated statements of operations for the six months ended June 30, 2011 included $0.9 million in “supplies, facilities and other operating costs” that should have been recorded in “net loss attributable to noncontrolling interest,” and (ii) the condensed consolidated balance sheets as of December 31, 2011 included such $0.9 million in “accrued liabilities” that should have been presented outside of permanent equity as “redeemable noncontrolling interest” (see Note 7). Because the amount was not material to the results of operations or financial position as of and for any of such previous fiscal periods or to the fiscal periods ended June 30, 2012, the Company recorded an adjustment to record such expense of $0.9 million in “supplies, facilities and other operating costs,” in the condensed consolidated statements of operations during the fiscal period ended June 30, 2012.

• Leasehold improvements aggregating $0.4 million should have been written off and included in “supplies, facilities and other operating costs” during the periods from 2009 through 2011. Because the amount was not material to the results of operations or financial position as of and for any of such previous fiscal periods or to the fiscal periods ended June 30, 2012, the Company recorded an adjustment to record such expense of $0.4 million in “supplies, facilities and other operating costs,” in the condensed consolidated statements of operations during the fiscal period ended June 30, 2012.

• Management fees payable to the Company’s principal shareholder of $0.7 million related to reimbursement in connection with services provided pursuant to the management agreement, should have been expensed in “supplies, facilities and other operating costs” in 2011. Because the amount was not material to the results of operations or financial position as of and for any of such previous fiscal periods or to the fiscal periods ended June 30, 2012, the Company recorded an adjustment to record such expense of $0.7 million in “supplies, facilities and other operating costs,” in the condensed consolidated statements of operations during the fiscal period ended June 30, 2012.

8

The net impact of the out of period adjustments described above decreased “operating income” by $0.2 million, increased “net loss attributable to noncontrolling interest” by $0.9 million, and decreased “net income attributable to CRC Health Corporation” by $1.1 million for the fiscal period ended June 30, 2012.

Presentation and Disclosure Corrections — The Company determined that:

• Interest income of $0.2 million and $0.6 million during the three and nine months ended September 30, 2011, previously included in “interest expense, net,” in the condensed consolidated statements of operations for the three and nine months ended September 30, 2011, should be included in “other income.” Accordingly, the presentation in the condensed consolidated statement of operations for the three and nine months ended September 30, 2011 has been corrected.

• Purchases of property and equipment included in accounts payable of $0.3 million at September 30, 2011, should have been presented and disclosed as a noncash investing activity. Accordingly, the condensed consolidated statement of cash flows for the nine months ended September 30, 2011 has been corrected as follows (in thousands):

	Nine Months Ended September 30, 2011
	As Reported			Adjustments			As Corrected
Cash flows from operating activities:
Changes in assets and liabilities - accounts payable	$	144		$	648		$	792
Net cash provided by operating activities		34,148			648			34,796
Cash flows from investing activities:
Additions of property and equipment		(12,356	)		(648	)		(13,004	)
Net cash used in investing activities		(12,295	)		(648	)		(12,943	)
Net increase in cash and cash equivalents	$	6,959		$	—		$	6,959

Recently Adopted Pronouncements — The Financial Accounting Standards Board (“FASB”) Accounting Standards Update issued (“ASU”) No. 2012-02, Intangibles—Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment, permits an entity to assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative impairment test. If the entity determines that it is not more likely than not that the asset is impaired, it would have the option to forgo the annual calculation of the fair value of an indefinite-lived intangible asset. The updated guidance will be effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. The adoption of the new guidance will not have a material impact on the Company’s condensed consolidated financial statements.

2. GOODWILL AND INTANGIBLE ASSETS

Goodwill

Due to the decline in enrollment and revenues at the Company’s weight loss reporting unit during the three months ended September 30, 2012 and lowered forecasted future cash flows, the Company tested its weight loss reporting unit for possible impairment. As a result of this preliminary analysis, the Company recognized non-cash goodwill impairment of $4.8 million in the weight loss reporting unit of the weight management segment during the three months ended September 30, 2012. Such goodwill impairment charge is management’s best estimate of the impairment loss. The remaining goodwill in the weight loss reporting unit was $2.4 million as of September 30, 2012. Management expects to complete and finalize the measurement of the goodwill impairment prior to the end of the fiscal year, and any additional impairment loss will be recognized in the three months ending December 31, 2012.

9

Intangible Assets

Total intangible assets at September 30, 2012 and December 31, 2011 consist of the following (in thousands):

	September 30, 2012							December 31, 2011
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Intangible assets subject to amortization:
Referral network	$	17,177		(5,046	)	$	12,131	$	17,177	$	(4,402	)		12,775
Accreditations		7,142		(2,098	)		5,044		7,142		(1,831	)		5,311
Curriculum		4,650		(1,366	)		3,284		4,650		(1,191	)		3,459
Government contracts (including Medicaid)		34,967		(15,541	)		19,426		34,967		(13,793	)		21,174
Managed care contracts		14,500		(9,700	)		4,800		14,500		(8,605	)		5,895
Total intangible assets subject to amortization:	$	78,436	$	(33,751	)	$	44,685	$	78,436	$	(29,822	)	$	48,614
Intangible assets not subject to amortization:
Trademarks and trade names							170,632							170,632
Certificates of need							44,600							44,600
Regulatory licenses							37,501							37,501
Total intangible assets not subject to amortization							252,733							252,733
Total intangible assets						$	297,418						$	301,347

Total amortization expense for intangible assets subject to amortization was $1.3 million and $1.4 million for the three months ended September 30, 2012 and 2011, respectively, and $3.9 million and $4.1 million for the nine months ended September 30, 2012 and 2011, respectively.

In the first quarter of 2011, the Company recognized a non-cash impairment charge of $1.9 million related to intangible assets not subject to amortization in its youth division, which is included in the condensed consolidated statement of operations as goodwill and asset impairment. Also in the first quarter of 2011, the Company recognized a non-cash impairment charge of $2.1 million related to assets subject to amortization in its youth division, which is included in the condensed consolidated statement of operations as loss from discontinued operations, net of tax.

3. INCOME TAXES

The Company calculates its income tax expense for interim periods by applying the full year’s estimated effective tax rate in its financial statements for interim periods (in thousands, except percentages).

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Income tax expense from continuing operations	$	5,390		$	6,629		$	10,117		$	12,155
Effective tax rate		71.1	%		49.1	%		54.0	%		45.0	%

The Company’s effective tax rate of 71.1% for the three months ended September 30, 2012 differed from the effective tax rate for the three months ended September 30, 2011 of 49.1%, as well as the tax computed at the U.S. federal statutory income tax rate of 35%, due primarily to the non-deductible non-cash impairment charge to goodwill of $4.8 million.

The Company’s effective tax rate of 54.0% for the nine months ended September 30, 2012 differed from the effective tax rate for the nine months ended September 30, 2011 of 45.0%, as well as the tax computed at the U.S. federal statutory income tax rate of 35%, due primarily to the non-deductible non-cash impairment charge to goodwill of $4.8 million.

10

The Company records liabilities related to uncertain tax positions in accordance with authoritative guidance on accounting for uncertainty in income taxes. As of September 30, 2012 and December 31, 2011, the Company’s cumulative unrecognized tax benefits were $1.5 million and $0.9 million. Included in the balance of unrecognized tax benefits at September 30, 2012 and December 31, 2011 was $1.5 million and $0.9 million, that, if recognized, would affect the effective tax rate.

The Company recognizes interest and penalties related to unrecognized tax positions as part of our provision for federal and state and income taxes. We accrued $0.1 million for the payment of interest and penalties as of September 30, 2012. The Company did not accrue interest and penalties related to unrecognized tax positions prior to 2012.

The Company files income tax returns in the United States federal, various states, and foreign tax jurisdictions in which we have subsidiaries. During the year, the IRS commenced examinations of certain of our U.S. federal income tax returns for years including 2009 and 2010. We do not expect that the results of these examinations will have a material effect on our financial condition or results of operations. The statute of limitations remains open for 2007 through 2012 in the U.S. federal and for 2006 through 2012 in state jurisdictions. Years outside the normal statute of limitation remain open to audit by tax authorities due to tax attributes generated in those earlier years that have been carried forward and may be audited in subsequent years when utilized.

4. LONG-TERM DEBT

Long-term debt at September 30, 2012 and December 31, 2011 consists of the following (in thousands):

	September 30, 2012			December 31, 2011
Term loans, net of discount of $2,982 in 2012	$	385,645		$	388,664
Revolving line of credit		27,000			36,500
Senior subordinated notes, net of discount of $880 in 2012 and $1,078 in 2011		176,416			176,218
Other		26			297
Total debt		589,087			601,679
Less: current portion of long-term debt		(145	)		(7,050	)
Total long-term debt	$	588,942		$	594,629

Term Loans and Revolving Line of Credit

Term Loans

On March 7, 2012, the aggregate principal amount of $80.9 million of Term Loans (the “Term Loans B-1”) was refinanced with cash proceeds (net of related fees and expenses) of an aggregate principal amount of $87.6 million of new Term Loans that mature on November 16, 2015 (the “Term Loans B-3”). New creditors and existing Term Loans B-1 creditors represented $67.0 million and $20.6 million of the Term Loans B-3 principal amount, respectively. Of the $20.6 million related to existing creditors, $6.1 million was contributed as additional Term Loan B-3 principal. As a part of the refinancing, the Company repaid $66.4 million of the aggregate principal Term Loans B-1. This repayment was recognized as an extinguishment of debt and $0.2 million of the remaining unamortized issuance costs related to Term Loans B-1 were charged to interest expense during the three months ended March 31, 2012. The Company recognized the refinancing of the remaining aggregate principal amount of $14.5 million with existing Term Loans B-1 creditors as a modification of debt. Refinancing costs of $0.5 million associated with the modified debt were charged to interest expense during the three months ended March 31, 2012. The remaining debt issuance costs of $2.2 million related to the refinancing were capitalized and are being amortized over the life of the Term Loans B-3 using the effective interest rate method. The Term Loans B-3 were issued with an original issue discount of 4.00% which is being amortized over the term of the Term Loans B-3 using the effective interest rate method.

At September 30, 2012, $83.1 million, net of discount of $3.0 million, are outstanding on the Term Loans B-3. Interest on these Term Loans B-3 is payable quarterly at: (i) for LIBOR loans for any interest period, a rate per annum equal to the LIBOR rate as determined by the administrative agent (but not less than 1.50%), plus an applicable margin of 7.00%, subject to an increase to 8.00% during any period that the Company’s public corporate family rating from Moody’s is not at least B3 or the Company’s public corporate credit rating from Standard & Poor’s Ratings Services (“S&P”) is not at least B-, and (ii) for base rate loans, a rate per annum equal to the greater of (x) the prime rate of the administrative agent and (y) the federal funds rate plus one-half of 1.00% (but, in either case, not less than 2.50%), plus an applicable margin of 6.00%, subject to an increase to 7.00% during any period that the

11

Company’s public corporate family rating from Moody’s is not at least B3 or the Company’s public corporate rating credit rating from S&P is not at least B-. At September 30, 2012, the entire amount of these Term Loan B-3 consisted of LIBOR loans and the interest rate thereon was 8.5%.

The Term Loans B-3 are payable in quarterly principal installments of less than $0.1 million on September 30, 2013 and $0.2 million over the payment period between December 31, 2013 and September 30, 2015, with the remainder due on the maturity date of November 16, 2015.

Under the terms of this refinancing, the Company is required to pay (i) on March 31, 2013, a fee equal to 1.00% of the outstanding principal amount of such lender’s Term Loans B-3 as of such date, (ii) on March 31, 2014, a fee equal to 1.50% of the outstanding principal amount of such lender’s Term Loans B-3 as of such date and (iii) on the Maturity Date, a fee equal to 1.50% of the outstanding principal amount of such lender’s Term Loans B-3 as of such date. These fees are charged to interest expense over the term of the Term Loans B-3 using the effective interest rate method.

The Term Loans B-3 are subject to a 1.00% prepayment premium to the extent the Term Loans B-3 are refinanced, or the terms thereof are amended, in either case, for the purpose of reducing the applicable yield with respect thereto, in each case prior to the first anniversary of the refinancing.

At September 30, 2012, $302.5 million of the remaining Term Loans (the “Term Loans B-2”) are outstanding. The Term Loans B-2 mature on November 16, 2015. Interest on these Term Loans B-2 is payable quarterly at: (i) for LIBOR loans for any interest period, a rate per annum equal to the LIBOR rate as determined by the administrative agent, plus an applicable margin of 4.50% and (ii) for base rate loans, a rate per annum equal to the greater of (x) the prime rate of the administrative agent and (y) the federal funds rate plus one-half of 1.00%, plus an applicable margin of 3.50%. At September 30, 2012, the entire amount of these Term Loans B-2 consisted of LIBOR loans and the interest rate thereon was 4.86%.

The Term Loans B-2 are payable in quarterly principal installments of $0.1 million on September 30, 2013 and $0.8 million over the payment period between December 31, 2013 and September 30, 2015, with the remainder due on the maturity date of November 16, 2015.

The Company is required to apply a certain portion of its excess cash to the principal amount of the Term Loans on an annual basis. Excess cash under the Company’s Credit Agreement is defined as net income attributable to the Company adjusted for certain cash and non-cash items and is required to be calculated after the end of each year. Required payments, if any are due in March of the subsequent year. The Company made payments related to its excess cash in March of 2012, 2011 and 2010 of $6.8 million, $9.6 million and $7.3 million, respectively. No such similar amounts have been classified as a current liability as of September 30, 2012.

Revolving Line of Credit

On February 6, 2012, the Company repaid $13.5 million in revolving credit due to maturity of the commitment.

At September 30, 2012, the Company had aggregate revolving credit commitments of $63.0 million which mature on August 16, 2015. Interest is payable quarterly at (i) for LIBOR loans for any interest period, a rate per annum equal to the LIBOR rate as determined by the administrative agent, plus an applicable margin of 4.00%, 3.75%, 3.50% or 3.25%, based upon the Company’s leverage ratio being within certain defined ranges, and (ii) for base rate loans, a rate per annum equal to the greater of (x) the prime rate of the administrative agent and (y) the federal funds rate plus one-half of 1.00%, plus an applicable margin of 3.00%, 2.75%, 2.50% or 2.25%, based upon the Company’s leverage ratio being within certain defined ranges. Commitment fees are payable quarterly at a rate equal to 0.625% per annum. At September 30, 2012, the amount outstanding under the Company’s Revolving Line of Credit was $27.0 million and the interest rate thereon was 4.36%. At September 30, 2012, the Company’s letters of credit against the revolving commitments were $9.5 million.

The Company’s Term Loans and Revolving Line of Credit are guaranteed by the Company’s direct parent company, CRC Health Group, Inc. (“Holdings”) and substantially all of the Company’s current and future wholly-owned domestic subsidiaries, and are secured by substantially all of the Company’s, Holdings’ and the Company’s guarantor subsidiaries’ existing and future property and assets and by a pledge of the Company’s capital stock and the capital stock of the Company’s domestic wholly-owned subsidiaries and up to 65% of the capital stock of first-tier foreign subsidiaries. The Company’s Credit Agreement requires the Company to comply on a quarterly basis with certain financial and other covenants, including a maximum total leverage ratio test and an interest coverage ratio test. At September 30, 2012, the Company was in compliance with all the covenants.

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Senior Subordinated Notes — At September 30, 2012, the outstanding aggregate principal amount related to the Company’s 10.75% Senior Subordinated Notes (the “Notes”) due February 1, 2016, was $176.4 million, net of discount of $0.9 million. Interest is payable semiannually. The Company may redeem some or all of the Notes at the redemption prices (expressed as percentages of principal amount of Notes to be redeemed) set forth below, plus accrued and unpaid interest thereon, if redeemed during the twelve-month period beginning on February 1 of each of the years indicated below:

Year	Percentage
2013		101.792	%
2014 and thereafter		100.000	%

If there is a change of control as specified in the indenture, the Company must offer to repurchase the Notes at 101% of their face amount, plus accrued and unpaid interest. The Notes are subordinated to all of the Company’s existing and future senior indebtedness, rank equally with all of the Company’s existing and future senior subordinated indebtedness and rank senior to all of the Company’s existing and future subordinated indebtedness. The Notes are guaranteed on an unsecured senior subordinated basis by each of the Company’s wholly owned subsidiaries that guarantee the Company’s Term Loans and Revolving Line of Credit. The Company’s Notes agreement requires it to comply on a quarterly basis with certain covenants. At September 30, 2012, the Company was in compliance with all the covenants.

Interest expense — The following table presents the components of interest expense (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Contractual interest on total debt	$	11,262		$	9,564		$	32,805		$	32,083
Amortization of debt discount and capitalized financing costs		1,355			1,009			4,369			3,005
Interest capitalized to property and equipment, net		(136	)		(112	)		(354	)		(331	)
Total interest expense	$	12,481		$	10,461		$	36,820		$	34,757

At September 30, 2012, currently scheduled principal payments of total debt, excluding the effects of the discounts on the term loans and the senior subordinated notes, are as follows (in thousands):

2012 (remaining 3 months)	$	26
2013		1,170
2014		4,193
2015		410,263
2016		177,296
Total	$	592,948

5. FAIR VALUE MEASUREMENTS

Assets and Liabilities Measured at Fair Value on a Recurring

As of September 30, 2012 and December 31, 2011, the Company did not have any assets or liabilities measured at fair value on a recurring basis.

Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

The Company’s goodwill and other indefinite-lived intangible assets are tested and reviewed annually for impairment during the fourth quarter or whenever there is a significant change in events or circumstances that indicate that the fair value of the asset may be less than the carrying amount of the asset. In addition, the Company’s property and equipment is assessed for recoverability of the carrying value whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.

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The following table presents the non-financial assets that were measured and recorded at fair value during the three and nine month periods ending September 30, 2012 due to a change in circumstances and as a result recorded such assets at fair value as of September 30, 2012 (in thousands):

	Three and Nine Months Ended September 30, 2012
	Impairment Charge		Fair Value
Goodwill (see Note 2)	$	4,840	$	2,400

Fair Value of Financial Instruments

Financial instruments not measured at fair value on a recurring basis include cash, restricted cash, accounts receivable net, loan program notes receivable (net), accounts payable, term loans (net), and senior subordinated notes (net). With the exception of financial instruments noted in the following table, the fair value of the Company’s financial instruments approximate carrying value due to their short maturities.

The estimated fair value of financial instruments with long-term maturities is as follows:

	September 30, 2012				December 31, 2011
	(in thousands)
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Assets
Loan program notes receivable, net	$	11,785	$	9,731	$	10,541	$	8,195
Liabilities
Term loans, net	$	385,645	$	394,081	$	388,664	$	370,268
Senior subordinated notes, net	$	176,416	$	168,727	$	176,218	$	162,854

The estimated fair value for loan program notes is primarily based on securitization market conditions for similar loans. The Company’s term loans are measured at fair value based on present value methods using credit spreads derived from market data to discount the projected interest and principal payments. The Company’s senior subordinated notes are measured at fair value based on bond-yield data from market trading activity as well as U.S Treasury rates with similar maturities as the senior subordinated notes. As of September 30, 2012 and December 31, 2011, the estimated fair value of loan program notes, term loans and senior subordinated notes was determined based on Level 3 inputs.

6. COMMITMENTS AND CONTINGENCIES

Litigation — In a complaint initially filed on July 6, 2011, and amended on August 25, 2011, in Multnomah County Circuit Court in Oregon, 17 former students of one of our previously closed therapeutic boarding school facilities (Mount Bachelor Academy) allege mental and physical abuse by certain former employees or agents of the school. The Company and CRC Health Oregon, Inc. are among the defendants in the pending litigation. The plaintiffs seek a total of $26.0 million in relief. A second suit was filed in November 2011in Multnomah County Circuit Court in Oregon by 14 former students also alleging abuse. The plaintiffs seek a total of $23.0 million in relief in the second suit. The Company and the other defendants intend to defend vigorously the pending lawsuits. In consultation with counsel and based on its preliminary investigation into the facts alleged, the Company believe these cases are without merit. However, at this time, the Company is unable to predict the outcome of the lawsuit, the possible loss or range of loss, if any, after consideration of the extent of insurance coverage associated with the resolution of the lawsuit or any potential effect it may have on the Company or its operations. On May 10, 2012, Nautilus Insurance Corporation, filed a complaint against CRC Health Group, Inc. and certain related entities seeking declaratory relief in the federal district court in Portland, Oregon. The Complaint seeks a judicial determination as to whether the Nautilus general and healthcare professional liability insurance policies provide coverage for these suits against Mount Bachelor Academy and asks the court to enter judgment that the policies are null and void, or alternatively that the policies do not cover these specific lawsuits, and to declare that Nautilus has no duty to defend or indemnify Mount Bachelor Academy, Aspen or CRC. In consultation with counsel and based on our preliminary review of the matters alleged, the Company believes this suit is without merit and is vigorously defending the matter.

In 2011, two actions were brought against the Company’s New Life Lodge facility. One suit alleges negligence and medical malpractice resulting in wrongful death and seeks a total $32.0 million in compensatory and punitive damages. The second suit is a medical malpractice action for alleged wrongful death and sought $13.0 million in compensatory and punitive damages. This suit was dismissed without prejudice in October 2012. Plaintiff’s counsel may refile the suit within one year of the dismissal and has indicated

14

that he intends to do such. The Company intends to defend vigorously these lawsuits. In consultation with counsel and based on its preliminary investigation into the facts alleged, the Company believes these cases are without merit. However, at this time, the Company is unable to predict the outcome of the lawsuit or the possible loss or range of loss, if any, after consideration of the extent of insurance coverage associated with the resolution of the lawsuit or any potential effect it may have on the Company or its operations.

The Company is involved in litigation and regulatory investigations arising in the course of business. After consultation with legal counsel, management estimates that these matters will be resolved without material adverse effect on the Company’s future financial position or results from operations and cash flows.

7. REDEEMABLE NONCONTROLLING INTEREST

The Company owned a seventy-five percent interest in an entity. The noncontrolling interest holder had the unilateral right to require the Company to redeem the noncontrolling interest at a price to be calculated pursuant to the terms and conditions of the operating agreement. In July 2012, the Company redeemed the noncontrolling interest for $0.5 million. The Company previously recorded the estimated redemption amount of $0.9 million as a “net loss attributable to noncontrolling interest,” in the condensed consolidated statements of operations for the six months ended June 30, 2012. The gain of $0.4 million is recorded as “net income attributable to noncontrolling interest” for the three months ended September 30, 2012.

8. STOCKHOLDERS’ EQUITY

Capital Contributed by Parent

Contributions from and distributions to the Parent are reflected as changes to additional paid-in capital on the condensed consolidated balance sheets. During the nine months ended September 30, 2012, the Company recorded a capital distribution to the Parent of $9.5 million for payment of its debt obligations.

9. STOCK-BASED COMPENSATION

The Company incurs stock-based compensation expense related to the equity awards made by the Group to employees of the Company. The total stock-based compensation expense was $0.7 million for both the three months ended September 30, 2012 and 2011, and $1.7 million and $2.1 million for the nine months ended September 30, 2012 and 2011, respectively. Stock-based compensation expense is recorded within salaries and benefits on the condensed consolidated statements of operations. The total income tax benefit recognized in the condensed consolidated statement of operations for stock-based compensation expense was $0.3 million for both the three months ended September 30, 2012 and 2011, and $0.7 million and $0.8 million, for the nine months ended September 30, 2012 and 2011, respectively.

During the nine months ended September 30, 2012, the Group granted 44,300 units, which represent 398,700 and 44,300 share options to purchase Class A and Class L common stock of the Group, respectively. At September 30, 2012 and December 31, 2011, the Company had 3,531,200 and 3,736,359 unvested option shares with per-share, weighted average grant date fair values of $3.38 and $3.32, respectively. Additionally, 420,968 option shares with a per-share weighted average grant date fair value of $3.34 vested during the nine months ended September 30, 2012.

Activity under the Group’s plans for the nine months ended September 30, 2012 is summarized below:

	Option Shares			Weighted- Average Exercise Price Per Share		Weighted- Average Grant Date Fair Value		Weighted- Average Remaining Contractual Term (In Years)
Balance at December 31, 2011		6,764,840		$	7.31				6.25
Granted		443,000		$	7.57	$	4.16		9.54
Exercised		(6,424	)
Forfeited/cancelled/expired		(473,192	)	$	8.30	$	4.27
Outstanding-September 30, 2012		6,728,224		$	7.27				5.79
Exercisable-September 30, 2012		3,197,024		$	6.58				4.10
Exercisable and expected to be exercisable		6,391,813		$	7.27				5.79

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10. RESTRUCTURING

On March 24, 2011, the Company announced a plan to transition the services provided within its youth division to a more focused national network of services. Additionally, as a part of a plan to align Company’s resources with its business plan, management initiated restructuring of certain of its administrative functions at its corporate headquarters and other divisions during 2011. Collectively, this plan is referred to as the FY11 plan. As of September 30, 2012, the remaining restructuring reserve consists of future rental payments. These future rental payments, net of estimated sublease income, related to operating lease obligations are expected to continue through fiscal 2020. As of September 30, 2012, the restructuring reserve for the FY11 plan was $4.9 million.

In the second half of fiscal 2008, management initiated a restructuring plan (the “FY08 Plan”) to align the Company’s resources with its business plan by initiating facility consolidations, facility exit actions and certain workforce reductions. As of September 30, 2012, the remaining restructuring reserve consists of future rental payments. These future rental payments, net of estimated sublease income, are expected to continue through fiscal 2018. As of September 30, 2012, the restructuring reserve for the FY08 plan was $4.7 million.

A summary of activity under the FY11 and FY08 restructuring plans, all of which primarily relate to operating leases, including those classified as discontinued operations, is shown in the table below:

Restructuring reserve at December 31, 2011:
Recovery	$	1,596
Youth		8,287
Total restructuring reserve at December 31, 2011		9,883
Expenses:
Recovery		207
Youth		887
Total expenses		1,094
Cash payments:
Recovery		(347	)
Youth		(1,067	)
Total cash payment		(1,414	)
Restructuring reserve at September 30, 2012:
Recovery		1,456
Youth		8,107
Total restructuring reserve at September 30, 2012	$	9,563

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11. DISCONTINUED OPERATIONS

The results of operations for those facilities classified as discontinued operations are summarized below (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Net client service revenues	$	1,090		$	1,630		$	1,365		$	11,114
Operating expenses		1,621			8,371			4,092			22,765
Asset impairment		—			—			—			2,454
Interest expense		—			(1	)		(1	)		(3	)
Other income		—			10			—			10
Loss before income taxes		(531	)		(6,732	)		(2,728	)		(14,098	)
Income tax benefit		(200	)		(2,613	)		(1,028	)		(5,473	)
Loss from discontinued operations	$	(331	)	$	(4,119	)	$	(1,700	)	$	(8,625	)

12. SEGMENT INFORMATION

Reportable segments are based upon the Company’s organizational structure, the manner in which the operations are managed and on the level at which the Company’s chief operating decision-maker allocates resources. The Company’s chief operating decision-maker is its Chief Executive Officer.

A summary of the Company’s reportable segments are as follows:

Recovery — The recovery segment specializes in the treatment of chemical dependency and other behavioral health disorders. Services offered in this segment include: inpatient/residential care, partial/day treatment, intensive outpatient groups, therapeutic living/half-way house environments, aftercare centers and detoxification. As of September 30, 2012, the recovery segment operates 29 inpatient, 16 outpatient facilities, and 57 comprehensive treatment centers (“CTCs”) in 21 states.

Youth — The youth segment provides a wide variety of adolescent therapeutic programs through settings and solutions that match individual needs with the appropriate learning and therapeutic environment. Services offered in this segment include boarding schools and experiential outdoor education programs. As of September 30, 2012, the youth segment operates 15 adolescent and young adult programs in 6 states.

Weight management — The weight management segment provides adult and adolescent treatment services for obesity and eating disorders, each a related behavioral disorder. Services offered in this segment include treatment plans through a combination of medical, psychological and social treatment programs. As of September 30, 2012, the weight management segment operates 21 facilities in 10 states, and one in the United Kingdom.

Corporate — In addition to the three reportable segments described above, the Company has activities classified as corporate which represent general and administrative expenses (management, financial, legal, human resources and information systems), and stock-based compensation expense that are not allocated to the segments.

Major Customers — No single customer represented 10% or more of the Company’s total net revenue in any period presented.

Geographic Information — The Company’s business operations are primarily in the United States.

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Selected segment financial information for the Company’s reportable segments was as follows (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Net client service revenues:
Recovery	$	89,595		$	86,497		$	265,204		$	261,101
Youth		20,039			19,562			56,164			52,682
Weight management		10,082			11,909			22,560			25,818
Corporate		14			33			56			112
Total net client service revenues	$	119,730		$	118,001		$	343,984		$	339,713
Operating income (loss):
Recovery	$	30,128		$	26,065		$	82,888		$	84,978
Youth		960			1,891			1,158			(2,921	)
Weight management		(3,089	)		3,037			(3,076	)		3,853
Corporate		(8,203	)		(7,250	)		(26,175	)		(24,779	)
Operating income		19,796			23,743			54,795			61,131
Interest expense		(12,481	)		(10,461	)		(36,820	)		(34,757	)
Other income		269			216			763			621
Income from continuing operations before income taxes	$	7,584		$	13,498		$	18,738		$	26,995

13. CONDENSED CONSOLIDATING FINANCIAL INFORMATION

As of September 30, 2012, the Company had $176.4 million aggregate principal amount of the Notes outstanding. The Notes are fully and unconditionally guaranteed, jointly and severally on an unsecured senior subordinated basis, by the Company’s 100% owned subsidiaries.

The following supplemental tables present condensed consolidating balance sheets for the Company and its subsidiary guarantors as of September 30, 2012 and December 31, 2011, the condensed consolidating statements of operations for the three and nine months ended September 30, 2012 and 2011, the condensed consolidated statements of comprehensive income for the nine months ended September 30, 2011 (total comprehensive income was the same as net income for the three months ended September 30, 2011, and the three and nine months ended September 30, 2012), and the condensed consolidating statements of cash flows for the nine months ended September 30, 2012 and 2011. As a result of the Company’s redemption of the noncontrolling interest in a subsidiary non-guarantor (see Note 7), the condensed consolidating financial information have been reclassified for all periods presented to reflect the presentation of all subsidiaries as Subsidiary Guarantors.

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Condensed Consolidating Balance Sheet as of September 30, 2012

(In thousands) (Unaudited)

	CRC Health Corporation		Subsidiary Guarantors		Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	—	$	16,171	$	—			16,171
Restricted cash		315		—		—			315
Accounts receivable, net		—		37,423		—			37,423
Prepaid expenses		2,788		3,154		—			5,942
Other current assets		526		1,385		—			1,911
Deferred income taxes		6,365		—		—			6,365
Current assets of discontinued operations		—		352		—			352
Total current assets		9,994		58,485		—			68,479
Property and equipment, net		8,660		118,586		—			127,246
Goodwill		—		518,952		—			518,952
Other intangible assets, net		—		297,418		—			297,418
Other assets, net		20,975		502		—			21,477
Investment in subsidiaries		948,650		—		(948,650	)		—
Total assets	$	988,279	$	993,943	$	(948,650	)	$	1,033,572
Liabilities and equity
Current liabilities:
Accounts payable	$	4,852	$	1,126	$	—		$	5,978
Accrued liabilities		16,620		15,805		—			32,425
Income taxes payable		8,350		—		—			8,350
Current portion of long-term debt		119		26		—			145
Other current liabilities		1,006		12,080		—			13,086
Current liabilities of discontinued operations		—		2,668		—			2,668
Total current liabilities		30,947		31,705		—			62,652
Long-term debt		588,942		—		—			588,942
Other long-term liabilities		1,593		7,100		—			8,693
Long-term liabilities of discontinued operations		—		6,488		—			6,488
Deferred income taxes		103,249		—		—			103,249
Total liabilities		724,731		45,293		—			770,024
Total equity		263,548		948,650		(948,650	)		263,548
Total liabilities and equity	$	988,279	$	993,943	$	(948,650	)	$	1,033,572

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Condensed Consolidating Balance Sheet as of December 31, 2011

(In thousands) (Unaudited)

	CRC Health Corporation		Subsidiary Guarantors		Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	—	$	10,183	$	—		$	10,183
Restricted cash		328		—		—			328
Accounts receivable, net		—		36,196		—			36,196
Prepaid expenses		5,179		3,193		—			8,372
Other current assets		571		2,067		—			2,638
Income taxes receivable		516		—		—			516
Deferred income taxes		6,365		—		—			6,365
Current assets of discontinued operations		—		1,261		—			1,261
Total current assets		12,959		52,900		—			65,859
Property and equipment, net		9,993		116,847		—			126,840
Goodwill		—		523,792		—			523,792
Other intangible assets, net		—		301,347		—			301,347
Other assets, net		20,635		484		—			21,119
Investment in subsidiaries		951,669		—		(951,669	)		—
Total assets	$	995,256	$	995,370	$	(951,669	)	$	1,038,957
Liabilities and equity
Current liabilities:
Accounts payable	$	3,670	$	1,324	$	—		$	4,994
Accrued liabilities		18,414		13,625		—			32,039
Current portion of long-term debt		6,771		279		—			7,050
Other current liabilities		863		11,749		—			12,612
Current liabilities of discontinued operations		—		2,511		—			2,511
Total current liabilities		29,718		29,488		—			59,206
Long-term debt		594,629		—		—			594,629
Other long-term liabilities		915		7,416		—			8,331
Long-term liabilities of discontinued operations		—		6,797		—			6,797
Deferred income taxes		105,040		—		—			105,040
Total liabilities		730,302		43,701		—			774,003
Total equity		264,954		951,669		(951,669	)		264,954
Total liabilities and equity	$	995,256	$	995,370	$	(951,669	)	$	1,038,957

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Condensed Consolidating Statements of Operations

For the Three Months Ended September 30, 2012

(In thousands) (Unaudited)

	CRC Health Corporation			Subsidiary Guarantors			Eliminations			Consolidated
Net revenues:
Net client service revenues	$	14		$	119,716		$	—		$	119,730
Management fee revenues		20,672			—			(20,672	)		—
Total net revenues		20,686			119,716			(20,672	)		119,730
Operating expenses:
Salaries and benefits		6,420			46,937			—			53,357
Supplies, facilities and other operating costs		691			34,218			—			34,909
Provision for doubtful accounts		—			1,908			—			1,908
Depreciation and amortization		1,107			3,813			—			4,920
Goodwill impairment		—			4,840			—			4,840
Management fee expense		—			20,672			(20,672	)		—
Total operating expenses		8,218			112,388			(20,672	)		99,934
Operating income		12,468			7,328			—			19,796
Interest expense		(12,474	)		(7	)		—			(12,481	)
Other income		267			2			—			269
Income from continuing operations before income taxes		261			7,323			—			7,584
Income tax expense		185			5,205			—			5,390
Equity in income of subsidiaries, net of tax		2,221			—			(2,221	)		—
Income from continuing operations		2,297			2,118			(2,221	)		2,194
Loss from discontinued operations, net of tax		—			(331	)		—			(331	)
Net income		2,297			1,787			(2,221	)		1,863
Net income attributable to noncontrolling interest		—			434			—			434
Net income attributable to CRC Health Corporation	$	2,297		$	2,221		$	(2,221	)	$	2,297

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Condensed Consolidating Statements of Operations

For the Three Months Ended September 30, 2011

(In thousands) (Unaudited)

	CRC Health Corporation			Subsidiary Guarantors			Eliminations			Consolidated
Net revenues:
Net client service revenues	$	33		$	117,968		$	—		$	118,001
Management fee revenues		17,615			—			(17,615	)		—
Total net revenues		17,648			117,968			(17,615	)		118,001
Operating expenses:
Salaries and benefits		3,881			47,941			—			51,822
Supplies, facilities and other operating costs		2,148			32,725			—			34,873
Provision for doubtful accounts		—			2,572			—			2,572
Depreciation and amortization		1,184			3,807			—			4,991
Management fee expense		—			17,615			(17,615	)		—
Total operating expenses		7,213			104,660			(17,615	)		94,258
Operating income		10,435			13,308			—			23,743
Interest expense		(10,439	)		(22	)		—			(10,461	)
Other income		210			6			—			216
Income from continuing operations before income taxes		206			13,292			—			13,498
Income tax expense		101			6,528			—			6,629
Equity in income of subsidiaries, net of tax		2,645			—			(2,645	)		—
Income from continuing operations		2,750			6,764			(2,645	)		6,869
Loss from discontinued operations, net of tax		—			(4,119	)		—			(4,119	)
Net income	$	2,750		$	2,645		$	(2,645	)	$	2,750

22

Condensed Consolidating Statements of Operations

For the Nine Months Ended September 30, 2012

(In thousands) (Unaudited)

	CRC Health Corporation			Subsidiary Guarantors			Eliminations			Consolidated
Net revenues:
Net client service revenues	$	57		$	343,927		$	—		$	343,984
Management fee revenues		62,958			—			(62,958	)		—
Total net revenues		63,015			343,927			(62,958	)		343,984
Operating expenses:
Salaries and benefits		20,185			141,908			—			162,093
Supplies, facilities and other operating costs		2,765			99,057			—			101,822
Provision for doubtful accounts		—			5,782			—			5,782
Depreciation and amortization		3,282			11,370			—			14,652
Goodwill impairment		—			4,840			—			4,840
Management fee expense		—			62,958			(62,958	)		—
Total operating expenses		26,232			325,915			(62,958	)		289,189
Operating income		36,783			18,012			—			54,795
Interest expense		(36,789	)		(31	)		—			(36,820	)
Other income		754			9			—			763
Income from continuing operations before income taxes		748			17,990			—			18,738
Income tax expense (benefit)		404			9,713			—			10,117
Equity in income of subsidiaries, net of tax		6,077			—			(6,077	)		—
Income from continuing operations		6,421			8,277			(6,077	)		8,621
Loss from discontinued operations, net of tax		—			(1,700	)		—			(1,700	)
Net income		6,421			6,577			(6,077	)		6,921
Net loss attributable to noncontrolling interest		—			(500	)		—			(500	)
Net income attributable to CRC Health Corporation	$	6,421		$	6,077		$	(6,077	)	$	6,421

23

Condensed Consolidating Statements of Operations

For the Nine Months Ended September 30, 2011

(In thousands) (Unaudited)

	CRC Health Corporation			Subsidiary Guarantors			Eliminations			Consolidated
Net revenues:
Net client service revenues	$	136		$	339,577		$	—		$	339,713
Management fee revenues		59,738			—			(59,738	)		—
Total net revenues		59,874			339,577			(59,738	)		339,713
Operating expenses:
Salaries and benefits		12,787			142,150			—			154,937
Supplies, facilities and other operating costs		6,229			94,354			—			100,583
Provision for doubtful accounts		—			6,426			—			6,426
Depreciation and amortization		3,303			11,386			—			14,689
Asset impairment		—			1,947			—			1,947
Management fee expense		—			59,738			(59,738	)		—
Total operating expenses		22,319			316,001			(59,738	)		278,582
Operating income (loss)		37,555			23,576			—			61,131
Interest expense		(34,574	)		(183	)		—			(34,757	)
Other income		606			15			—			621
Income from continuing operations before income taxes		3,587			23,408			—			26,995
Income tax expense		1,615			10,540			—			12,155
Equity in income of subsidiaries, net of tax		4,243			—			(4,243	)		—
Income from continuing operations		6,215			12,868			(4,243	)		14,840
Loss from discontinued operations, net of tax		—			(8,625	)		—			(8,625	)
Net income	$	6,215		$	4,243		$	(4,243	)	$	6,215

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Condensed Consolidating Statements of Comprehensive Income

For the Nine Months Ended September 30, 2011

(In thousands) (Unaudited)

	CRC Health Corporation		Subsidiary Guarantors		Eliminations			Consolidated
Net income (loss)	$	6,215	$	4,243	$	(4,243	)	$	6,215
Other comprehensive income:
Net change in unrealized gain on cash flow hedges (net of tax of $1,391)		2,106		—		—			2,106
Total comprehensive income (loss)	$	8,321	$	4,243	$	(4,243	)	$	8,321

25

Condensed Consolidating Statements of Cash Flows

For the Nine Months Ended September 30, 2012

(In thousands) (Unaudited)

	CRC Health Corporation			Subsidiary Guarantors			Eliminations		Consolidated
Cash flows from operating activities:
Net cash provided by operating activities	$	18,658		$	24,430		$	—	$	43,088
Cash flows from investing activities:
Additions of property and equipment		(2,848	)		(8,480	)		—		(11,328	)
Proceeds from the sale of property and equipment		—			691			—		691
Acquisition of non-controlling interest		—			(500	)		—		(500	)
Other investing activities		(101	)		—			—		(101	)
Net cash used in investing activities		(2,949	)		(8,289	)		—		(11,238	)
Cash flows from financing activities:
Intercompany transfers		9,673			(9,673	)		—		—
Borrowings of long-term debt		84,096			—			—		84,096
Repayment of long-term debt		(87,638	)		(480	)		—		(88,118	)
Borrowings on revolving line of credit		18,000			—			—		18,000
Repayments on revolving line of credit		(27,500	)		—			—		(27,500	)
Capital distributed to Parent		(9,554	)		—			—		(9,554	)
Capitalized financing costs		(2,786	)		—			—		(2,786	)
Net cash (used in) provided by financing activities		(15,709	)		(10,153	)		—		(25,862	)
Net increase in cash and cash equivalents		—			5,988			—		5,988
Cash and cash equivalents — beginning of period		—			10,183			—		10,183
Cash and cash equivalents — end of period	$	—		$	16,171		$	—	$	16,171

26

Condensed Consolidating Statements of Cash Flows

For the Nine Months Ended September 30, 2011

(In thousands) (Unaudited)

	CRC Health Corporation			Subsidiary Guarantors			Eliminations		Consolidated
Cash flows from operating activities:
Net cash provided by operating activities	$	11,038		$	23,758		$	—	$	34,796
Cash flows from investing activities:
Additions of property and equipment		(4,432	)		(8,572	)		—		(13,004	)
Proceeeds from the same of property and equipment		—			152			—		152
Other investing activities		(91	)		—			—		(91	)
Net cash used in investing activities		(4,523	)		(8,420	)		—		(12,943	)
Cash flows from financing activities:
Intercompany transfers		5,467			(5,467	)		—		—
Repayment of long-term debt		(9,697	)		(2,912	)		—		(12,609	)
Borrowings on revolving line of credit		9,500			—			—		9,500
Repayments on revolving line of credit		(7,000	)		—			—		(7,000	)
Capital distributed to Parent		(1,616	)		—			—		(1,616	)
Capitalized financing costs		(3,169	)		—			—		(3,169	)
Net cash used in financing activities		(6,515	)		(8,379	)		—		(14,894	)
Net increase in cash and cash equivalents		—			6,959			—		6,959
Cash and cash equivalents — beginning of period		—			7,111			—		7,111
Cash and cash equivalents — end of period	$	—		$	14,070		$	—	$	14,070

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion should be read in conjunction with the Unaudited Condensed Consolidated Financial Statements and the related notes that appear elsewhere in this Quarterly Report. Unless the context otherwise requires, in this management’s discussion and analysis of financial condition and results of operations, the terms “our company,” “we,” “us,” “the Company” and “our” refer to CRC Health Corporation and its consolidated subsidiaries.

OVERVIEW

We are a leading provider of treatment services related to substance abuse, troubled youth, and other addiction diseases and behavioral disorders. We deliver our services through our three divisions: recovery, youth and weight management. Our recovery division provides substance abuse and behavioral disorder treatment services through our residential treatment facilities and outpatient treatment clinics. Our youth division provides therapeutic educational programs to underachieving young people through residential schools and outdoor programs. Our weight management division provides treatment services through adolescent and adult weight management programs as well as eating disorder facilities.

As of September 30, 2012 our recovery division, operated 29 inpatient, 16 outpatient facilities, and 57 comprehensive treatment centers (“CTCs”) in 21 states. Our youth division, operated 15 adolescent and young adult programs in 6 states. Our weight management division operated 21 facilities in 10 states, and one in the United Kingdom.

EXECUTIVE SUMMARY

During the three months ended September 30, 2012 we generated $119.7 million in net client service revenues, an increase of $1.7 million as compared to the three months ended September 30, 2011, primarily due increases of $3.1 million and $0.5 million in our recovery and youth divisions, respectively, offset by a decrease of $1.8 million in our weight management division. During the three months ended September 30, 2012, operating income decreased $3.9 million, or 17%, as compared to the three months ended September 30, 2011, primarily due to decreases of $6.1 million, and $0.9 million, in our weight management and youth divisions, respectively, partially offset by an increase of $4.1 million to our recovery division.

During the nine months ended September 30, 2012 we generated $344.0 million in net client service revenues, an increase of $4.3 million, or 1%, as compared to the nine months ended September 30, 2011, primarily due to increases of $4.1 million and $3.5 million in our recovery and youth divisions, respectively, offset by a $3.3 million decrease in our weight management division. During the nine months ended September 30, 2012, operating income decreased $6.3 million, or 10%, as compared to the nine months ended September 30, 2011, primarily due to decreases of $6.9 million and $2.1 million, in our weight management and recovery divisions, respectively, partially offset by an increase of $4.1 million to our youth division.

The following table presents the sources of consolidated net client service revenues as a percentage of revenue:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Private		57.4	%		58.3	%		56.6	%		57.4	%
Commercial		22.6			21.4			23.0			21.9
Government		20.0			20.3			20.4			20.7
Total		100.0	%		100.0	%		100.0	%		100.0	%

Due to the decline in enrollment and revenues at our weight loss reporting unit during the three months ended September 30, 2012 and lowered forecasted future cash flows, we tested our weight loss reporting unit for possible impairment. As a result of this preliminary analysis, we recognized non-cash goodwill impairment of $4.8 million in the weight loss reporting unit of the weight management segment during the three months ended September 30, 2012. Such goodwill impairment charge is management’s best estimate of the impairment loss. The remaining goodwill in the weight loss reporting unit was approximately $2.4 million as of September 30, 2012. Management expects to complete and finalize the measurement of the goodwill impairment prior to the end of the fiscal year, and any additional impairment loss will be recognized in the three months ending December 31, 2012.

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On March 7, 2012, we amended our Credit Agreement to refinance $80.9 million of our term loans that were scheduled to mature on February 6, 2013 with cash proceeds (net of related fees and expenses) from a new tranche of term loans. As a result of this agreement, all term loans under our senior secured credit facility will mature on November 16, 2015. See note 4 to unaudited condensed consolidated financial statements for further information.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

General

The accompanying discussion and analysis of our financial condition and results of operations are based on our unaudited condensed consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles of the United States. The preparation of these financial statements requires us to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, net revenue and expenses. We have based our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Our senior management has reviewed our critical accounting policies and their application in the preparation of our financial statements and related disclosures and discussed the development, selection and disclosure of significant estimates. To the extent that actual results differ from those estimates, our future results of operations may be affected. We believe that there have not been any significant changes during the nine months ended September 30, 2012 to the items that we have previously reported in our critical accounting policies in management’s discussion and analysis of financial condition and results of operations for the year ended December 31, 2011 in our Annual Report on Form 10-K.

29

RESULTS OF OPERATIONS

The following table presents our results of operations (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Net client service revenues:
Recovery	$	89,595		$	86,497		$	265,204		$	261,101
Youth		20,039			19,562			56,164			52,682
Weight management		10,082			11,909			22,560			25,818
Corporate		14			33			56			112
Total net client service revenues		119,730			118,001			343,984			339,713
Operating expenses:
Recovery		59,467			60,432			182,316			176,123
Youth		19,079			17,671			55,006			55,603
Weight management		13,171			8,872			25,636			21,965
Corporate		8,217			7,283			26,231			24,891
Total operating expenses		99,934			94,258			289,189			278,582
Operating income (loss):
Recovery		30,128			26,065			82,888			84,978
Youth		960			1,891			1,158			(2,921	)
Weight management		(3,089	)		3,037			(3,076	)		3,853
Corporate		(8,203	)		(7,250	)		(26,175	)		(24,779	)
Operating income		19,796			23,743			54,795			61,131
Interest expense		(12,481	)		(10,461	)		(36,820	)		(34,757	)
Other income		269			216			763			621
Income from continuing operations before income taxes		7,584			13,498			18,738			26,995
Income tax expense		5,390			6,629			10,117			12,155
Income from continuing operations, net of tax		2,194			6,869			8,621			14,840
Loss from discontinued operations, net of tax		(331	)		(4,119	)		(1,700	)		(8,625	)
Net income		1,863			2,750			6,921			6,215
Net income (loss) attributable to noncontrolling interest		434			—			(500	)		—
Net income attributable to CRC Health Corporation	$	2,297		$	2,750		$	6,421		$	6,215

30

The following table compares total facility statistics:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Recovery
Residential and outpatient facilities
Net client service revenues (in thousands)	$	55,601	$	55,489	$	165,475	$	169,485
Patient days		142,602		149,317		423,505		452,508
Net client service revenues per patient day	$	389.90	$	371.62	$	390.73	$	374.55
CTCs
Net client service revenues (in thousands)	$	33,994	$	31,008	$	99,729	$	91,616
Patient days		2,619,759		2,464,859		7,689,586		7,297,287
Net client service revenues per patient day	$	12.98	$	12.58	$	12.97	$	12.55
Youth
Residential facilities
Net client service revenues (in thousands)	$	11,429	$	10,783	$	34,780	$	31,839
Patient days		36,841		38,466		117,698		112,647
Net client service revenues per patient day	$	310.23	$	280.33	$	295.50	$	282.64
Outdoor programs
Net client service revenues (in thousands)	$	8,610	$	8,779	$	21,384	$	20,843
Patient days		16,920		18,123		42,621		43,120
Net client service revenues per patient day	$	508.87	$	484.41	$	501.72	$	483.37
Weight Management
Net client service revenues (in thousands)	$	10,082	$	11,909	$	22,560	$	25,818
Patient days		37,930		46,452		75,628		87,249
Net client service revenues per patient day	$	265.81	$	256.37	$	298.30	$	295.91

Three Months Ended September 30, 2012 Compared to Three Months Ended September 30, 2011

Recovery

Net client service revenues increased $3.1 million, or 4%, primarily due to a $3.0 million increase from our CTC facilities. The increase in revenues at our CTC facilities was due to a combination of increased patient days at our facilities driven by marketing programs and clinically appropriate retention efforts, increased patient days resulting from new CTC facilities that were acquired and opened during the fourth quarter of 2011, as well as certain rate increases across our facilities.

Operating income increased by $4.1 million, or 16%. This increase was primarily the result of the increase in revenues described above, the decrease in operating expenses at our residential facility in Tennessee, as well as a decrease in the provision for doubtful accounts due to better collection efforts at our residential facilities. These effects were partially offset by increases in investments in sales, marketing and clinical quality management, and increases due to new CTC facilities that were acquired and opened during the fourth quarter of 2011.

Youth

Net client service revenues increased by $0.5 million, or 2%, due to an increase of $0.6 million, or 6%, in residential facilities, offset by a decrease of $0.2 million, or 2%, in outdoor programs. Residential program revenues increased due increased rates, partially offset by a 4% decrease in patient days. Outdoor program revenues decreased due to a 7% decrease in patient days partially offset by increased rates.

31

Operating income decreased by $0.9 million, primarily due to increases in investments in sales, marketing and clinical quality management, partially offset by increases in revenues described above.

Weight Management

Net client service revenues decreased by $1.8 million, or 15%, primarily due to an 18% decrease in patient days at our weight loss programs due to a decline in enrollment, partially offset by an increase in rates.

Operating income decreased by $6.1 million, primarily due to the decrease in net client service revenues noted above as well as a non-cash goodwill impairment charge of $4.8 million, partially offset by a decrease in operating expenses at our weight loss programs in reaction to the decline in enrollment.

Corporate

Operating loss increased by $1.0 million, or 13%. The increase is primarily due to an increase in salaries and benefits, as well as an increase in professional fees.

Nine Months Ended September 30, 2012 Compared to Nine Months Ended September 30, 2011

Recovery

Net client service revenues increased $4.1 million, or 2%, primarily due to an $8.1 million increase from CTCs, offset by a $4.0 million decrease from residential facilities. The increase in revenues at our CTC facilities was due to a combination of increased patient days at our facilities driven by marketing programs and clinically appropriate retention efforts, as well as certain rate increases across our facilities. The decrease in revenues at our residential facilities was primarily driven by a decrease in patient days at our residential facility in Tennessee that was closed for part of the period. The decrease in revenues was partially offset by an increase in patient days at our other residential facilities.

Operating income decreased by $2.1 million, or 2%. This decrease was primarily the result of increases in investments in sales, marketing and clinical quality management expenses, increases at certain residential facilities to support the increase in patient days, increases in salaries and benefits for additional executive and finance personnel and increases at our CTC facilities to support the increase in patient days and the new CTC facilities that were acquired and opened during the fourth quarter of 2011. These increases were partially offset by a decrease in operating expenses at our residential facility in Tennessee that was closed for part of the period, as well as increases in revenues described above.

Youth

Net client service revenues increased by $3.5 million, or 7%, due to increases of $3.0 million, or 9%, and $0.5 million, or 3%, in our residential facilities and outdoor programs, respectively. Residential program revenues increased due to a 4% increase in patient days and increased rates. Outdoor program revenues increased due to increased rates, partially offset by a 1% decrease in patient days.

Operating income increased by $4.1 million. This increase was primarily due to a non-cash intangible asset impairment charge of $1.9 million recorded in the first quarter of 2011 as well as decreases in salaries and benefits, the effects of which were partially offset by increases in investments in sales, marketing and clinical quality management.

Weight Management

Net client service revenues decreased by $3.3 million, or 13%, primarily due to a 15% decrease in patient days resulting from a decline in enrollment at our weight loss programs, partially offset by an increase in rates.

Operating income decreased by $6.9 million. This decrease was due primarily to the decrease in revenue described above and the non-cash goodwill impairment charge of $4.8 million recorded in the third quarter of 2012, the effects of which were partially offset by a decrease in certain non-recurring expenses from the prior period and a decrease in operating costs at our weight loss programs in reaction to the decline in enrollment.

Corporate

Operating loss increased by $1.4 million. The increase is primarily due to an increase in professional fees, partially offset by a decrease in debt costs as well as a reduction in other operating expenses.

32

Interest expense

Interest expense includes interest paid on our debt, amortization of debt discount and capitalized financing costs, and interest capitalized to property and equipment, net.

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Contractual interest on total debt	$	11,262		$	9,564		$	32,805		$	32,083
Amortization of debt discount and capitalized financing costs		1,355			1,009			4,369			3,005
Interest capitalized to property and equipment, net		(136	)		(112	)		(354	)		(331	)
Total interest expense	$	12,481		$	10,461		$	36,820		$	34,757

During the three and nine months ended September 30, 2012, contractual interest on total debt increased by $1.7 million and $0.7 million, respectively, primarily due to a higher interest rate on our Term Loans B-3 entered into in March 2012. During the three and nine months ended September 30, 2012, amortization of debt discount and capitalized financing costs increased by $0.3 million and $1.4 million, as compared to the same period in the prior year, primarily due to the amortization of additional capitalized financing costs related to the Term Loans B-3 entered into in March 2012.

Income tax expense

We calculate our income tax expense for interim periods by applying the full year’s estimated effective tax rate to our financial statements for interim periods.

For the three months ended September 30, 2012 and 2011, our tax expense on continuing operations was $5.4 million and $6.6 million, representing an effective tax rate of 71.1% and 49.1%. For the nine months ended September 30, 2012 and 2011, our tax expense on continuing operations was $10.1 million and $12.2 million, representing an effective tax rate of 54.0% and 45.0%. The increase in the effective tax rate is due primarily to the non-deductible non-cash impairment charge to goodwill of $4.8 million.

Loss from discontinued operations, net of tax

During the three and nine months ended September 30, 2012, loss from discontinued operations, net of tax, decreased by $3.8 million, and $6.9 million, respectively, as compared to the same periods in the prior year. The decrease was due to discontinuing multiple entities in 2011 as compared to only one entity in 2012.

Net loss attributable to noncontrolling interest

Net loss attributable to noncontrolling interest of $0.5 million during the nine months ended September 30, 2012, represents the cash buy-out amount of the redeemable noncontrolling interest in July 2012. Net income attributable to noncontrolling interest of $0.4 million during the three months ended September 30, 2012, represents the gain to adjust from amounts previously accrued. See Note 7 to unaudited condensed consolidated financial statements for further information.

Sources and Uses of Cash

Our principal sources of liquidity for operating activities are payments from self-pay patients, students, commercial payors and government programs for treatment services, and our revolving line of credit. We receive most of our cash from self-payors in advance or upon completion of treatment. Cash revenue from commercial payors and government programs is typically received upon delivery of treatment services.

33

	Nine Months Ended September 30,
	2012			2011
	(In thousands)
Net cash provided by operating activities	$	43,088		$	34,796
Net cash used in investing activities		(11,238	)		(12,943	)
Net cash used in financing activities		(25,862	)		(14,894	)
Net increase in cash	$	5,988		$	6,959

Cash provided by operating activities was $43.1 million for the nine months ended September 30, 2012, as compared to $34.8 million during the same period in 2011. The increase of $8.3 million was due primarily to a $3.9 million increase resulting from improved collection efforts, primarily in our Recovery division, as well as a $4.2 million increase resulting from timing differences in our income taxes receivable and payable balances.

Cash used in investing activities was $11.2 million for the nine months ended September 30, 2012, as compared to $12.9 million during the same period of 2011. The decrease of $1.7 million was due to a decrease in capital expenditures, a $0.5 million acquisition of our noncontrolling interest, partially offset by a $0.5 million increase in cash proceeds from the sale of property and equipment.

Cash used in financing activities was $25.9 million for the nine months ended September 30, 2012, as compared to $14.9 million during the same period in 2011. The increase of $11.0 million was due to net repayments of $12.0 million on our Revolving Line of Credit, a $6.4 million increase in capital distributed to parent primarily due to a $9.5 million payment for the Parent’s debt obligations in 2012, and an increase of $1.2 million in capitalized financing costs as a result of the Term Loans B-3 during the in 2012, partially offset by a decrease net repayments of long-term debt of $8.6 million.

Financing and Liquidity

We anticipate that cash generated by current operations, funds available under the revolving portion of our senior secured credit facility and existing cash and cash equivalents will be sufficient to meet working capital requirements, service our debt and finance capital expenditures over the next 12 months.

Credit Agreements — Please refer to Note 4 to Unaudited Condensed Consolidated Financial Statements for further discussion about our long-term borrowing arrangements.

Under the terms of our borrowing arrangements, we are required to comply with various covenants, including the maintenance of certain financial ratios, the calculations of which are based on Adjusted EBITDA, as defined in our credit agreements. As of September 30, 2012, we were in compliance with all such covenants. A breach of these could result in a default under our credit facilities and in our being unable to borrow additional amounts under our revolving credit facility. If an event of default occurs, the lenders could elect to declare all amounts borrowed under our credit facilities to be immediately due and payable and the lenders under our term loans and revolving credit facility could proceed against the collateral securing the indebtedness.

The computation of Adjusted EBITDA is provided below to provide an understanding of the impact that Adjusted EBITDA has on our ability to comply with certain covenants in our borrowing arrangements that are tied to these measures and to borrow under the credit facility. Adjusted EBITDA should not be considered as an alternative to net income (loss) or cash flows from operating activities (which are determined in accordance with GAAP) and is not being presented as an indicator of operating performance or a measure of liquidity. Other companies may define Adjusted EBITDA differently and, as a result, such measures may not be comparable to our Adjusted EBITDA.

34

The following table reconciles our net income to our Adjusted EBITDA for the three and nine months ended September 30, 2012 and 2011 (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Net Income Attributable to CRC Health Corporation:	$	2,297		$	2,750		$	6,421		$	6,215
Depreciation and amortization (1)		4,994			5,008			14,791			14,753
Income tax expense (benefit) (1)		5,190			4,015			9,089			6,683
Interest expense (1)		12,480			10,463			36,822			34,760
EBITDA		24,961			22,236			67,123			62,411
Adjustments to EBITDA:
Discontinued operations		124			1,118			1,434			3,973
Goodwill and asset impairment (1)		4,840			—			4,840			4,401
Non-impairment restructuring activities (1)		184			5,385			1,114			8,674
Stock-based compensation expense		711			703			1,727			2,060
Foreign exchange translation		(18	)		32			(46	)		35
Loss (gain) on disposal of property and equipment (1)		179			(94	)		1,022			(125	)
Management fees		593			399			2,434			1,955
Non-recurring legal costs		323			70			1,135			138
Debt costs		116			98			293			1,074
Other non-cash charges and non-recurring costs		(358	)		(6	)		(121	)		1,102
Total adjustments to EBITDA		6,694			7,705			13,832			23,287
Adjusted EBITDA	$	31,655		$	29,941		$	80,955		$	85,698

(1) Includes amounts related to both continuing operations and discontinued operations.

Off-Balance Sheet Obligations

As of September 30, 2012, our off-balance sheet obligations consisted of $9.5 million in letters of credit and $0.2 million in loan purchase commitments related to our Loan Program.

Obligations and Commitments

The following items represent material changes in our specified contractual obligations during the nine months ended September 30, 2012 (see Note 4 to the unaudited condensed consolidated financial statements), compared to the contractual obligations table included in our Annual Report on Form 10-K for the year ended December 31, 2011:

• As a result of the refinancing of a portion of our Term Loans on March 7, 2012, aggregate principal of $87.6 million of the Term Loans B-3 now matures on November 16, 2015. Before the refinancing, $80.9 million of Term Loans B-1 were payable on maturity on February 6, 2013.

• Upon its maturity in February 2012, we repaid $13.5 million of the amount outstanding under our revolving credit facility. We subsequently borrowed $13.0 million under the remaining available revolving line of credit which matures on August 16, 2015.

Item 3. Quantitative and Qualitative Disclosure about Market Risk

For quantitative and qualitative disclosures about market risk affecting us, see “Quantitative and Qualitative Disclosure about Market Risk” in Item 7A of Part II of our Annual Report on Form 10-K for the year ended December 31, 2011. As of September 30, 2012, our exposure to market risk has not changed materially since December 31, 2011.

35

Item 4. Controls and Procedures

Background

On August 16, 2011, the Company announced that it was conducting a review of inconsistencies in the accounts at one of its recovery residential treatment facilities (the “Facility”). On October 4, 2011, the Board of Directors of the Company (the “Board”), in consultation with the Audit Committee of the Board (the “Audit Committee”) and management, adopted the conclusions of the investigation and concluded that the Company’s previously issued consolidated financial statements for the years ended December 31, 2008, 2009 and 2010, along with the accompanying independent auditors’ reports and its previously issued condensed consolidated financial statements for the fiscal quarter ended March 31, 2011 should not be relied upon because of errors identified in such financial statements.

Management initially identified certain errors upon initiating an internal investigation after noting inconsistencies in accounting for certain transactions at the Facility. Following a briefing by management on the issues, the Audit Committee hired independent counsel to conduct a review of accounting transactions at the Facility. The investigation identified issues related to misconduct by a former employee as well as errors in accounting for revenue, accounts receivable, bad debt expenses and general expenses. As a result of these errors, the Company restated its previously issued consolidated financial statements for the years ended December 31, 2008, December 31, 2009 and December 31, 2010, including the quarterly data for the years 2009 and 2010, and for the fiscal quarter ended March 31, 2011.

Evaluation of Disclosure Controls and Procedures

We, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, have evaluated the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period covered by this report. This evaluation identified a material weakness in our internal control over financial reporting as noted below in Management’s Report on Internal Control over Financial Reporting. Based on the evaluation of this material weakness, our principal executive officer and principal financial officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were not effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of its financial reporting and the preparation of its financial statements for external purposes in accordance with GAAP and includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

A material weakness is a control deficiency, or combination of control deficiencies, such that there is a reasonable possibility that a material misstatement to the annual or interim financial statements will not be prevented or detected on a timely basis. Based upon that reevaluation, management identified a material weakness as of December 31, 2011 in our internal control over financial reporting. The material weakness is the result of a combination of control deficiencies identified at facilities with manual accounting procedures. More specifically, weaknesses were identified relative to revenue recognition and the accounting for accounts receivable, the allowance for doubtful accounts, accrued expenses and prepaid assets as well as issues relating to lack of segregation of duties.

As a result of the material weakness in internal control over financial reporting described above, management concluded that our internal control over financial reporting was not effective as of December 31, 2011 and September 30, 2012 based on the COSO framework. If not remediated, this material weakness could result in future misstatements of account balances or in disclosures that could result in a material misstatement to our annual or interim consolidated financial statements.

36

Continued Remediation of the Material Weaknesses in Internal Control Over Financial Reporting

Management has been actively engaged in remediation of the material weakness. These remediation efforts are intended both to address the identified material weakness and to enhance our overall financial control environment. Management has i.) added new and more experienced staff, ii.) instituted training for accounting and finance personnel, iii.) continued to review the processes and procedures, including appropriate segregation of duties, surrounding revenue recognition and accounting for accounts receivable, the allowance for doubtful accounts, accrued expenses, prepaid assets and other matters as deemed appropriate, iv.) improved the processes over reconciliations of the general ledger and v.) continued to evaluate the relevant accounting policies and procedures to ensure that they are documented and standardized across the Company, circulated to the appropriate constituencies and reviewed and updated on a periodic basis. Management reports, periodically, to the Audit Committee on the progress of the remediation plan.

Management believes the measures described above and others that will be implemented will remediate the control deficiencies that we have identified and strengthen our internal control over financial reporting. As management continues to evaluate and improve internal control over financial reporting, we may decide to take additional measures to address control deficiencies or determine to modify, or in appropriate circumstances not to complete, certain of the remediation measures described above.

Inherent Limitations on Effectiveness of Controls

The Company’s management, including the CEO and CFO, does not expect that our disclosure controls or our internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well-designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

37

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

In a complaint initially filed on July 6, 2011, and amended on August 25, 2011, in Multnomah County Circuit Court in Oregon, 17 former students of one of our previously closed therapeutic boarding school facilities allege mental and physical abuse by certain former employees or agents of the school. We and our subsidiary, CRC Health Oregon, Inc., are among the defendants in the pending litigation. The plaintiffs seek a total of $26.0 million in relief. A second suit was filed in November 2011 in Multnomah County Circuit Court in Oregon by 14 former students also alleging abuse. The plaintiffs seek a total of $23 million in relief in the second suit. We and the other defendants intend to defend vigorously the pending lawsuit. In consultation with counsel and based on our preliminary investigation into the facts alleged, we believe these cases are without merit. However, at this time, we are unable to predict the outcome of the lawsuit, the possible loss or range of loss, if any, after consideration of the extent of insurance coverage associated with the resolution of the lawsuit or any potential effect it may have on us or our operations. On May 10, 2012, Nautilus Insurance Corporation, filed a complaint against CRC Health Group Inc. and certain related entities seeking declaratory relief in the federal district court in Portland, Oregon. The Complaint seeks a judicial determination as to whether the Nautilus general and healthcare professional liability insurance policies provide coverage for these suits against Mount Bachelor Academy and asks the court to enter judgment that the policies are null and void, or alternatively that the policies do not cover these specific lawsuits, and to declare that Nautilus has no duty to defend or indemnify Mount Bachelor Academy, Aspen or CRC. In consultation with counsel and based on our preliminary review of the matters alleged, we believe this suit is without merit and is vigorously defending the matter.

In 2011, two actions were brought against our New Life Lodge facility. One suit alleges negligence and medical malpractice resulting in wrongful death and seeks a total $32.0 million in compensatory and punitive damages. The second suit is a medical malpractice action for alleged wrongful death and sought $13.0 million in compensatory and punitive damages. This suit was dismissed without prejudice in October 2012. Plaintiff’s counsel may refile the suit within one year of the dismissal and has indicated that he intends to do such. We intend to defend vigorously these lawsuits. In consultation with counsel and based on our preliminary investigation into the facts alleged, we believe these cases are without merit. However, at this time, we are unable to predict the outcome of the lawsuit or the possible loss or range of loss, if any, after consideration of the extent of insurance coverage associated with the resolution of the lawsuit or any potential effect it may have on us or our operations.

We are involved in other litigation and regulatory investigations arising in the ordinary course of business. After consultation with legal counsel, management estimates that these matters will be resolved without material adverse effect on the our future financial position or results from operations and cash flows, except as discussed above.

Item 1A. Risk Factors

As of September 30, 2012, there have been no material changes to the factors disclosed in Item 1A Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2011.

Item 6. Exhibits

The Exhibit Index beginning on page 40 of this report sets forth a list of exhibits.

38

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: November 13, 2012

CRC HEALTH CORPORATION (Registrant)
By	/S/ LEANNE M. STEWART
	LeAnne M. Stewart, Chief Financial Officer (Principal Financial Officer and duly authorized signatory)

39

CRC HEALTH CORPORATION

EXHIBIT INDEX

4.1l	Eleventh Supplemental Indenture dated as of August 20, 2012, by and among CRC Health Corporation, the Guarantors named therein, the New Guarantors named therein and U.S. Bank National Association, as Trustee, with respect to the 10.75% Senior Subordinated Notes due 2016.
10.2l	SUPPLEMENT NO. 12 dated as of August 20, 2012, to the Security Agreement dated as of February 6, 2006 among CRC Health Corporation (f/k/a CRC Health Group, Inc.), CRC Health Group, Inc. (f/k/a/ CRCA Holdings, Inc.), and the Subsidiaries of the Borrower identified therein and Citibank, N.A., as collateral Agent for the Secured Parties, as defined therein.
10.3l	SUPPLEMENT NO. 12 dated as of August 20, 2012, to the Guarantee Agreement dated as of February 6, 2006, among CRC Health Group, Inc., CRC Health Corporation, the Subsidiaries of the Borrower identified therein and Citibank, N.A., as Administrative Agent.
31.1	Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer ‡
31.2	Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer ‡
32.1	Section 1350 Certification of Principal Executive Officer †
32.2	Section 1350 Certification of Principal Financial Officer †
101.INS	XBRL Instance Document ‡
101.SCH	XBRL Taxonomy Extension Schema ‡
101.CAL	XBRL Taxonomy Extension Calculation Linkbase ‡
101.DEF	XBRL Taxonomy Extension Definition Linkbase ‡
101.LAB	XBRL Taxonomy Extension Label Linkbase ‡
101.PRE	XBRL Taxonomy Extension Presentation Linkbase ‡

‡ Filed herewith.

† Furnished herewith.

40

EX-4.1L

Exhibit 4.1l

ELEVENTH SUPPLEMENTAL INDENTURE

THIS ELEVENTH SUPPLEMENTAL INDENTURE dated as of August 20, 2012 among CRC Health Corporation, a Delaware corporation (the “Company”), the Guarantors, Healthy Living Academies, LLC, a Delaware limited liability company, Academy of the Sierras, a Healthy Living Academy, LLC, a Delaware limited liability company, Camp Wellspring, LLC, a Delaware limited liability company, Wellspring Adventure Camp, LLC, a Delaware limited liability company, and Wellspring Community Programs, LLC, a Delaware limited liability company (each, a “New Guarantor” and collectively, the “New Guarantors”), and U.S. Bank National Association, as trustee (the “Trustee”).

WHEREAS, the Company and the Guarantors have heretofore executed and delivered to the Trustee an indenture dated as of February 6, 2006 (the “Indenture”), providing for the issuance of $200 million aggregate principal amount of the Company’s 10.75% Senior Subordinated Notes due 2016 (the “Notes”), as supplemented by the First Supplemental Indenture, dated as of July 7, 2006 (the “First Supplemental Indenture”), the Second Supplemental Indenture, dated as of September 28, 2006 (the “Second Supplemental Indenture”), the Third Supplemental Indenture, dated as of October 24, 2006 (the “Third Supplemental Indenture”), the Fourth Supplemental Indenture, dated as of November 17, 2006 (the “Fourth Supplemental Indenture”), the Fifth Supplemental Indenture, dated as of April 27, 2007 (the “Fifth Supplemental Indenture”), the Sixth Supplemental Indenture, dated as of July 26, 2007 (the “Sixth Supplemental Indenture”), the Seventh Supplemental Indenture, dated as of May 29, 2008 (the “Seventh Supplemental Indenture”), the Eighth Supplemental Indenture, dated as of November 18, 2008 (the “Eighth Supplemental Indenture”), the Ninth Supplemental Indenture, dated as of April 27, 2009 (the “Ninth Supplemental Indenture”), and the Tenth Supplemental Indenture, dated as of December 29, 2009 (the “Tenth Supplemental Indenture”);

WHEREAS, the Company and the Guarantors propose to further amend and supplement the Indenture to join the New Guarantors, each a direct or indirect subsidiary of the Company, as a party to the Indenture, as a Guarantor thereunder;

WHEREAS, pursuant to Section 8.01 of the Indenture, the Company and the Trustee may amend, waive or supplement the Indenture, the Notes or the Guarantees without the consent of any Holders to make any change that would provide additional rights or benefits to the holders of Notes or that does not adversely affect the legal rights under the Indenture of any such holder;

WHEREAS, the Company, each Guarantor and the New Guarantors have been authorized by their respective board of directors, managers, members, partners, or general partners, as applicable, to enter into this Eleventh Supplemental Indenture;

WHEREAS, all other acts and proceedings required by law, by the Indenture and by the respective certificates of incorporation, certificates of formation, limited liability company agreements, partnership agreements, limited partnership agreements, by-laws and other organizational documents of the Company, each Guarantor and the New Guarantors to make this Eleventh Supplemental Indenture a valid and binding agreement for the purposes expressed herein, in accordance with its terms, have been duly performed;

WHEREAS, pursuant to Section 8.06 of the Indenture, the Trustee is authorized to execute and deliver this Eleventh Supplemental Indenture;

WHEREAS, the Company hereby requests that the Trustee execute and deliver this Eleventh Supplemental Indenture;

NOW, THEREFORE, for in consideration of the premises herein contained and in order to effect the proposed amendment to join the New Guarantors to the Indenture pursuant to Section 8.01 of the Indenture, the Company, the New Guarantors and the Guarantors agree with the Trustee as follows:

ARTICLE I

Amendment of Indenture

1.1. Amendment of Indenture. As of the date hereof, this Eleventh Supplemental Indenture amends the Indenture by joining the New Guarantors as parties to the Indenture, each as a Guarantor thereunder.

1.2. Execution and Delivery of Note Guarantee. Upon the effectiveness of this Eleventh Supplemental Indenture, each New Guarantor agrees that a notation of its Guarantee substantially in the form attached as Exhibit G to the Indenture, will be endorsed by a duly authorized officer of such New Guarantor on each Note authenticated and delivered by the Trustee under the Indenture.

ARTICLE II

Miscellaneous Provisions

2.1. Instruments to be Read Together. This Eleventh Supplemental Indenture is an indenture supplemental to and in implementation of the Indenture, and said Indenture, the First Supplemental Indenture, the Second Supplemental Indenture, the Third Supplemental Indenture the Fourth Supplemental Indenture, the Fifth Supplemental Indenture, the Sixth Supplemental Indenture, the Seventh Supplemental Indenture, the Eighth Supplemental Indenture, the Ninth Supplemental Indenture, the Tenth Supplemental Indenture and this Eleventh Supplemental Indenture shall henceforth be read together.

2.2. Confirmation. The Indenture as amended and supplemented by the First Supplemental Indenture, the Second Supplemental Indenture, the Third Supplemental Indenture, the Fourth Supplemental Indenture, the Fifth Supplemental Indenture, the Sixth Supplemental Indenture, the Seventh Supplemental Indenture, the Eighth Supplemental Indenture, the Ninth Supplemental Indenture, the Tenth Supplemental Indenture and further amended and supplemented by this Eleventh Supplemental Indenture is in all respects confirmed and preserved.

2.3. Terms Defined. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture.

2.4. Counterparts. This Eleventh Supplemental Indenture may be signed in any number of counterparts each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.

2.5. Effect of Headings. The section headings herein are for convenience only and shall not affect the construction hereof.

2.6. Effectiveness. The provisions of this Eleventh Supplemental Indenture will take effect immediately upon execution thereof by the parties hereto.

2.7. Trust Indenture Act Controls. If any provision of this Eleventh Supplemental Indenture limits, qualifies or conflicts with another provision that is required by or deemed to be included in this Eleventh Supplemental Indenture by the Trust Indenture Act, the required or incorporated provision shall control.

2.8. Governing Law. THIS ELEVENTH SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK.

2.9. Trustee. The Trustee makes no representations as to the validity or sufficiency of this Eleventh Supplemental Indenture. The recitals and statements herein are deemed to be those of the Company, the Guarantors and the New Guarantors and not of the Trustee.

[The remainder of this page is intentionally left blank.]

IN WITNESS WHEREOF, the undersigned have executed this Eleventh Supplemental Indenture this 20^th day of August, 2012.

CRC HEALTH CORPORATION
By:	/s/ LeAnne M. Stewart
Name:	LeAnne M. Stewart
Title:	Chief Financial Officer

4THERAPY.COM NETWORK
ADVANCED TREATMENT SYSTEMS, INC.
AHS OF IDAHO, INC.
ASPEN EDUCATION GROUP, INC.
ASPEN YOUTH, INC.
ATS OF CECIL COUNTY, INC.
ATS OF DELAWARE, INC.
ATS OF NORTH CAROLINA, INC.
AYS MANAGEMENT, INC.
BATON ROUGE TREATMENT CENTER, INC.
BAYSIDE MARIN, INC.
BGI OF BRANDYWINE, INC.
BOWLING GREEN INN OF PENSACOLA, INC.
BOWLING GREEN INN OF SOUTH DAKOTA, INC.
CAMP HUNTINGTON INC.
CAPS OF VIRGINIA, INC.
CARTERSVILLE CENTER, INC.
COMPREHENSIVE ADDICTION PROGRAMS, INC.
CORAL HEALTH SERVICES, INC.
CRC ED TREATMENT, INC.
CRC HEALTH MANAGEMENT, INC.
CRC HEALTH OREGON, INC.
CRC HEALTH TENNESSEE, INC.
CRC RECOVERY, INC.
CRC WEIGHT MANAGEMENT, INC.
GALAX TREATMENT CENTER, INC.
JAYCO ADMINISTRATION, INC.
MOUNT BACHELOR EDUCATIONAL CENTER, INC.
NEW LEAF ACADEMY, INC.
NORTHSTAR CENTER, INC.
SAN DIEGO HEALTH ALLIANCE
SHELTERED LIVING INCORPORATED
SIERRA TUCSON INC.
SOBER LIVING BY THE SEA, INC.
STONE MOUNTAIN SCHOOL, INC.
SUNHAWK ACADEMY OF UTAH, INC.
SUWS OF THE CAROLINAS, INC.
TRANSCULTURAL HEALTH DEVELOPMENT, INC.
TREATMENT ASSOCIATES, INC.
TURN-ABOUT RANCH, INC.
VIRGINIA TREATMENT CENTER, INC.
VOLUNTEER TREATMENT CENTER, INC.
YOUTH CARE OF UTAH, INC.
WCHS, INC.
WHITE DEER REALTY, LTD.
WHITE DEER RUN, INC.
WICHITA TREATMENT CENTER INC.
WILDERNESS THERAPY PROGRAMS, INC.
WILMINGTON TREATMENT CENTER, INC.
By:	/s/ LeAnne M. Stewart
	Name: LeAnne M. Stewart
	Title: Chief Financial Officer

ACADEMY OF THE SIERRAS, LLC
ADIRONDACK LEADERSHIP EXPEDITIONS, LLC
ASPEN ACHIEVEMENT ACADEMY, LLC
ASPEN INSTITUTE FOR BEHAVIORAL ASSESSMENT, LLC
ASPEN RANCH, LLC
BECKLEY TREATMENT CENTER, LLC
BROMLEY BROOK SCHOOL, LLC
CHARLESTON TREATMENT CENTER, LLC
CLARKSBURG TREATMENT CENTER, LLC
COPPER CANYON ACADEMY, LLC
CRC HOLDINGS, LLC
CRC WISCONSIN RD, LLC
EAST INDIANA TREATMENT CENTER, LLC
EVANSVILLE TREATMENT CENTER, LLC
FOUR CIRCLES RECOVERY CENTER, LLC
HEALTHY LIVING ACADEMIES, LLC
HUNTINGTON TREATMENT CENTER, LLC
INDIANAPOLIS TREATMENT CENTER, LLC
ISLAND VIEW RESIDENTIAL TREATMENT CENTER, LLC
LOAN ADMINISTRATION, LLC
NATIONAL SPECIALTY CLINICS, LLC
OAKLEY SCHOOL, LLC
OUTBACK THERAPEUTIC EXPEDITIONS, LLC
PARKERSBURG TREATMENT CENTER, LLC
PASSAGES TO RECOVERY, LLC
PHOENIX OUTDOOR, LLC
RICHMOND TREATMENT CENTER, LLC
SOUTHERN INDIANA TREATMENT CENTER, LLC
STRUCTURE HOUSE, LLC
SWIFT RIVER ACADEMY, L.L.C.
TALISMAN ACADEMY, LLC
TALISMAN SUMMER CAMP, LLC
WHEELING TREATMENT CENTER, LLC
WILLIAMSON TREATMENT CENTER, LLC
By:	/s/ LeAnne M. Stewart
Name:	LeAnne M. Stewart
Title:	Chief Financial Officer

LOAN HOLDINGS, LLC
By LOAN ADMINISTRATION, LLC, its Manager
By:	/s/ LeAnne M. Stewart
Name:	LeAnne M. Stewart
Title:	Chief Financial Officer

ACADEMY OF THE SIERRAS, A HEALTHY
LIVING ACADEMY, LLC
CAMP WELLSPRING, LLC
WELLSPRING ADVENTURE CAMP, LLC
WELLSPRING COMMUNITY PROGRAMS, LLC
By AYS MANAGEMENT, INC., its Manager
By:	/s/ LeAnne M. Stewart
Name:	LeAnne M. Stewart
Title:	Chief Financial Officer

THE CAMP RECOVERY CENTERS, L.P.
By CRC RECOVERY, INC., its General Partner
By:	/s/ LeAnne M. Stewart
Name:	LeAnne M. Stewart
Title:	Chief Financial Officer

CALIFORNIA TREATMENT SERVICES

SAN DIEGO TREATMENT SERVICES

By JAYCO ADMINISTRATION, INC., its Partner

By:	/s/ LeAnne M. Stewart
Name:	LeAnne M. Stewart
Title:	Chief Financial Officer
By TREATMENT ASSOCIATES, INC., its Partner
By:	/s/ LeAnne M. Stewart
Name:	LeAnne M. Stewart
Title:	Chief Financial Officer

MILWAUKEE HEALTH SERVICES SYSTEM

By CORAL HEALTH SERVICES, INC., its Partner

By:	/s/ LeAnne M. Stewart
Name:	LeAnne M. Stewart
Title:	Chief Financial Officer
By WCHS, INC., its Partner
By:	/s/ LeAnne M. Stewart
Name:	LeAnne M. Stewart
Title:	Chief Financial Officer

U.S. BANK NATIONAL ASSOCIATION, as Trustee

By:	/s/ Donald T. Hurrelbrink
Name:	Donald T. Hurrelbrink
Title:	Vice President

EX-10.2L

Exhibit 10.2l

SUPPLEMENT NO. 12 dated as of August 20, 2012, to the Security Agreement dated as of February 6, 2006 among CRC HEALTH CORPORATION, a Delaware corporation (f/k/a CRC HEALTH GROUP, INC.) (the “Borrower”), CRC HEALTH GROUP, INC., a Delaware corporation, (f/k/a/ CRCA Holdings, Inc.) (“Holdings”), and the Subsidiaries of the Borrower identified therein and CITIBANK, N.A., as Collateral Agent for the Secured Parties (as defined below).

A. Reference is made to the Credit Agreement dated as of February 6, 2006 (as amended and restated as of November 17, 2006, as further amended and restated as of January 20, 2011, as further amended and restated as of March 7, 2012 and as subsequently amended, supplemented or otherwise modified from time to time, the “Credit Agreement”), among Holdings, the Borrower, the lenders from time to time party thereto, Citibank, N.A., as Administrative Agent, Collateral Agent (in such capacity, the “Collateral Agent”), Swing Line Lender and L/C Issuer, and each Lender from time to time party thereto.

B. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Credit Agreement and the Security Agreement referred to therein.

C. The Grantors have entered into the Security Agreement in order to induce the Lenders to make Loans and the L/C Issuers to issue Letters of Credit. Section 7.14 of the Security Agreement provides that additional Restricted Subsidiaries of the Borrower may become Subsidiary Parties under the Security Agreement by execution and delivery of an instrument in the form of this Supplement. Each of the undersigned Restricted Subsidiaries (individually, a “New Subsidiary” and collectively, the “New Subsidiaries”) is executing this Supplement in accordance with the requirements of the Credit Agreement to become a Subsidiary Party under the Security Agreement in order to induce the Lenders to make additional Loans and the L/C Issuers to issue additional Letters of Credit and as consideration for Loans previously made and Letters of Credit previously issued.

Accordingly, the Collateral Agent and each New Subsidiary agree as follows:

SECTION 1. In accordance with Section 7.14 of the Security Agreement, each New Subsidiary by its signature below becomes a Subsidiary Party (and accordingly, becomes a Grantor) and Grantor under the Security Agreement with the same force and effect as if originally named therein as a Subsidiary Party and each New Subsidiary hereby (a) agrees to all the terms and provisions of the Security Agreement applicable to it as a Subsidiary Party and Grantor thereunder and (b) represents and warrants that the representations and warranties made by it as a Grantor thereunder are true and correct on and as of the date hereof. In furtherance of the foregoing, each New Subsidiary, as security for the payment and performance in full of the Obligations does hereby create and grant to the Collateral Agent, its successors and assigns, for the benefit of the Secured Parties, their successors and assigns, a security interest in and lien on all of such New Subsidiary’s right, title and interest in and to the Collateral (as defined in the Security Agreement) of such New Subsidiary. Each reference to a “Grantor” in the Security Agreement shall be deemed to include the New Subsidiaries. The Security Agreement is hereby incorporated herein by reference.

SECTION 2. Each New Subsidiary represents and warrants to the Collateral Agent and the other Secured Parties that this Supplement has been duly authorized, executed and delivered by it and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms.

SECTION 3. This Supplement may be executed in one or more counterparts, each of which shall be deemed an original but all of which when taken together shall constitute a single contract. Delivery by telecopier of an executed counterpart of a signature page to this Supplement shall be as effective as delivery of an original executed counterpart of this Supplement. This Supplement shall become effective when the Collateral Agent shall have received a counterpart of this Supplement that bears the signatures of the New Subsidiaries and a counterpart hereof shall have been executed on behalf of the Collateral Agent, and thereafter shall be binding upon such New Subsidiaries and the Collateral Agent and their respective permitted successors and assigns, and shall inure to the benefit of such New Subsidiaries, the Collateral Agent and the other Secured Parties and their respective successors and assigns, except that the New Subsidiaries shall not have the right to assign or transfer its rights or obligations hereunder or any interest herein or in the Collateral (and any such assignment or transfer shall be void) except as expressly contemplated by the Security Agreement or the Credit Agreement.

SECTION 4. Each New Subsidiary hereby represents and warrants that (a) set forth on Schedule I attached hereto is a true and correct schedule of the location of any and all Collateral of such New Subsidiary and (b) set forth under its signature hereto is the true and correct legal name of such New Subsidiary, its jurisdiction of formation and the location of its chief executive office.

SECTION 5. Except as expressly supplemented hereby, the Security Agreement shall remain in full force and effect.

SECTION 6. THIS SUPPLEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

SECTION 7. Any provision of this Supplement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

SECTION 8. All communications and notices hereunder shall be in writing and given as provided in Section 7.01 of the Security Agreement.

SECTION 9. Each New Subsidiary agrees to reimburse the Collateral Agent for its reasonable out-of-pocket expenses in connection with this Supplement, including the reasonable fees, other charges and disbursements of counsel for the Collateral Agent.

IN WITNESS WHEREOF, each New Subsidiary and the Collateral Agent have duly executed this Supplement to the Security Agreement as of the day and year first above written.

HEALTHY LIVING ACADEMIES, LLC
By:	/s/ LeAnne M. Stewart
	Name:	LeAnne M. Stewart
	Title:	Chief Financial Officer
Legal Name: Healthy Living Academies, LLC
Jurisdiction of Formation: Delaware Location of Chief Executive Office: 20400 Stevens Creek Blvd.
Suite 600 Cupertino, California 95014

ACADEMY OF THE SIERRAS, A HEALTHY LIVING ACADEMY, LLC
CAMP WELLSPRING, LLC WELLSPRING ADVENTURE CAMP, LLC WELLSPRING COMMUNITY PROGRAMS, LLC
By:	AYS MANAGEMENT, INC., its Manager
By:	/s/ LeAnne M. Stewart
	Name:	LeAnne M. Stewart
	Title:	Chief Financial Officer

Legal Name:	Academy of the Sierras, a Healthy Living Academy, LLC
	Camp Wellspring, LLC Wellspring Adventure Camp, LLC Wellspring Community Programs, LLC
Jurisdiction of Formation: Delaware Location of Chief Executive Office: 20400 Stevens Creek Blvd. Suite 600 Cupertino, California 95014

Signature Page to Supplement to Security Agreement

CITIBANK, N.A.,
as Collateral Agent
By:	/s/ Anthony V. Pantina
	Name: Anthony V. Pantina
	Title: VP, Director

Signature Page to Supplement to Security Agreement

Schedule I to Security Agreement Supplement

20400 Stevens Creek Blvd.

Suite 600

Cupertino, California 95014

EX-10.3L

Exhibit 10.3l

SUPPLEMENT NO. 12 dated as of August 20, 2012, to the Guarantee Agreement dated as of February 6, 2006, as subsequently supplemented, among CRC HEALTH GROUP, INC. (“Holdings”), CRC HEALTH CORPORATION, the Subsidiaries of the Borrower (as defined below) identified herein and CITIBANK, N.A., as Administrative Agent.

A. Reference is made to the Credit Agreement dated as of February 6, 2006 (as amended and restated as of November 17, 2006, as further amended and restated as of January 20, 2011, as further amended and restated as of March 7, 2012 and as subsequently amended, supplemented or otherwise modified from time to time, the “Credit Agreement”), among CRC Health Group, Inc., a Delaware corporation (“Holdings”), CRC Health Corporation, a Delaware corporation (the “Borrower”), the Guarantors party thereto (collectively, the “Guarantors”), Citibank, N.A., as Administrative Agent (in such capacity, the “Administrative Agent”), Collateral Agent, Swing Line Lender and L/C Issuer, and each Lender from time to time party thereto.

B. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Credit Agreement and the Guarantee Agreement referred to therein.

C. The Guarantors have entered into the Guarantee Agreement in order to induce the Lenders to make Loans and the L/C Issuers to issue Letters of Credit. Section 4.14 of the Guarantee Agreement provides that additional Restricted Subsidiaries of the Borrower may become Subsidiary Parties under the Guarantee Agreement by execution and delivery of an instrument in the form of this Supplement. Each of the undersigned Restricted Subsidiaries (individually, a “New Subsidiary” and collectively, the “New Subsidiaries”) is executing this Supplement in accordance with the requirements of the Credit Agreement to become a Subsidiary Party under the Guarantee Agreement in order to induce the Lenders to make additional Loans and the L/C Issuers to issue additional Letters of Credit and as consideration for Loans previously made and Letters of Credit previously issued.

Accordingly, the Administrative Agent and each New Subsidiary agree as follows:

SECTION 1. In accordance with Section 4.14 of the Guarantee Agreement, each New Subsidiary by its signature below becomes a Subsidiary Party (and accordingly, becomes a Guarantor) and Guarantor under the Guarantee Agreement with the same force and effect as if originally named therein as a Subsidiary Party and each New Subsidiary hereby (a) agrees to all the terms and provisions of the Guarantee Agreement applicable to it as a Subsidiary Party and Guarantor thereunder and (b) represents and warrants that the representations and warranties made by it as a Guarantor thereunder are true and correct on and as of the date hereof. Each reference to a “Guarantor” in the Security Agreement shall be deemed to include each New Subsidiary. The Guarantee Agreement is hereby incorporated herein by reference.

SECTION 2. Each New Subsidiary represents and warrants to the Administrative Agent and the other Secured Parties that this Supplement has been duly authorized, executed and delivered by it and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms.

SECTION 3. This Supplement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Supplement shall become effective when the Administrative Agent shall have received a counterpart of this Supplement that bears the signatures of the New Subsidiaries and the Administrative Agent has executed a counterpart hereof. Delivery of an executed signature page to this Supplement by facsimile transmission shall be as effective as delivery of a manually signed counterpart of this Supplement.

SECTION 4. Except as expressly supplemented hereby, the Guarantee Agreement shall remain in full force and effect.

SECTION 5. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

SECTION 6. In case any one or more of the provisions contained in this Supplement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and in the Guarantee Agreement shall not in any way be affected or impaired thereby (it being understood that the invalidity of a particular provision in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction). The parties hereto shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

SECTION 7. All communications and notices hereunder shall be in writing and given as provided in Section 4.01 of the Guarantee Agreement.

SECTION 8. Each New Subsidiary agrees to reimburse the Administrative Agent for its reasonable out-of-pocket expenses in connection with this Supplement, including the reasonable fees, other charges and disbursements of counsel for the Administrative Agent.

[Remainder of this page intentionally left blank]

IN WITNESS WHEREOF, each New Subsidiary and the Administrative Agent have duly executed this Supplement to the Guarantee Agreement as of the day and year first above written.

HEALTHY LIVING ACADEMIES, LLC
By:	/s/ LeAnne M. Stewart
	Name:	LeAnne M. Stewart
	Title:	Chief Financial Officer
ACADEMY OF THE SIERRAS, A HEALTHY LIVING ACADEMY, LLC CAMP WELLSPRING, LLC WELLSPRING ADVENTURE CAMP, LLC WELLSPRING COMMUNITY PROGRAMS, LLC
By:	AYS MANAGEMENT, INC., its Manager
By:	/s/ LeAnne M. Stewart
	Name:	LeAnne M. Stewart
	Title:	Chief Financial Officer

Signature Page to Supplement to Guarantee Agreement

CITIBANK, N.A.
By:	/s/ Anthony V. Pantina
	Name: Anthony V. Pantina Title: VP, Director

Signature Page to Supplement to Guarantee Agreement

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Andrew Eckert, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of CRC Health Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 13, 2012	/S/     ANDREW ECKERT
	Andrew Eckert
	Chief Executive Officer
	(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION

I, LeAnne M. Stewart, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of CRC Health Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 13, 2012	/S/    LEANNE M. STEWART
	LeAnne M. Stewart
	Chief Financial Officer
	(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Andrew Eckert, Chief Executive Officer of CRC Health Corporation (the “Company”), do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

• the Quarterly Report on Form 10-Q of the Company for the quarter ended September 30, 2012, as filed with the Securities and Exchange Commission (the “Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

• the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 13, 2012

/S/     ANDREW ECKERT

Andrew Eckert

Chief Executive Officer

(Principal Executive Officer)

A signed original of this written statement required by Section 906 has been provided to CRC Health Corporation and will be retained by CRC Health Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, LeAnne M. Stewart, Chief Financial Officer of CRC Health Corporation (the “Company”), do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

• the Quarterly Report on Form 10-Q of the Company for the quarter ended September 30, 2012, as filed with the Securities and Exchange Commission (the “Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

• the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 13, 2012

/S/     LEANNE M. STEWART

LeAnne M. Stewart

Chief Financial Officer

(Principal Financial Officer)

A signed original of this written statement required by Section 906 has been provided to CRC Health Corporation and will be retained by CRC Health Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

XML

LONG-TERM DEBT - (Schedule Of Long Term Debt) (Parenthetical) (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Term Loan [Member]
Debt Instrument [Line Items]
Term loans, net of discount	$ 2,982
Senior Subordinated Notes [Member]
Debt Instrument [Line Items]
Senior subordinated notes, net of discount	$ 880	$ 1,078

XML

RESTRUCTURING - (Summary Of Restructuring Activity) (Detail) (USD $)	9 Months Ended
	Sep. 30, 2012
Restructuring Cost and Reserve [Line Items]
Beginning balance	$ 9,883
Expenses	1,094
Cash payment	(1,414)
Ending balance	9,563
Recovery
Restructuring Cost and Reserve [Line Items]
Beginning balance	1,596
Expenses	207
Cash payment	(347)
Ending balance	1,456
Youth
Restructuring Cost and Reserve [Line Items]
Beginning balance	8,287
Expenses	887
Cash payment	(1,067)
Ending balance	$ 8,107

XML

COMMITMENTS AND CONTINGENCIES - (Narrative) (Detail) (USD $) In Millions, unless otherwise specified	9 Months Ended		12 Months Ended		1 Months Ended
	Sep. 30, 2012	Dec. 31, 2011 LegalMatter	Dec. 31, 2011 Negligence And Medical Malpractice [Member]	Dec. 31, 2011 Medical Malpractice [Member]	Jul. 06, 2011 First Lawsuit [Member] Plaintiff	Nov. 30, 2011 Second Lawsuit [Member] Plaintiff
Loss Contingencies [Line Items]
Complaint initially filed date	July 6, 2011
Amended date	August 25, 2011
Compensation mental and physical abuse			$ 32.0	$ 13.0	$ 26.0	$ 23.0
Number of former students					17	14
Number of actions		2

XML

DISCONTINUED OPERATIONS - (Summary Of Results Of Discontinued Operations) (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Net client service revenues	$ 1,090	$ 1,630	$ 1,365	$ 11,114
Operating expenses	1,621	8,371	4,092	22,765
Asset impairment				2,454
Interest expense		(1)	(1)	(3)
Other income		10		10
Loss before income taxes	(531)	(6,732)	(2,728)	(14,098)
Income tax benefit	(200)	(2,613)	(1,028)	(5,473)
Loss from discontinued operations	$ (331)	$ (4,119)	$ (1,700)	$ (8,625)

XML

FAIR VALUE MEASUREMENTS (Non Financial Asset Measured and Recorded At Fair Value) (Detail) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
Fair Value Assets And Liabilities Measured On Nonrecurring Basis [Line Items]
Goodwill, Impairment Charge	$ 4,840,000	$ 4,840,000	$ 4,840,000	$ 4,800
Goodwill, Fair Value	518,952,000		518,952,000		523,792,000
Fair Value, Measurements, Nonrecurring [Member]
Fair Value Assets And Liabilities Measured On Nonrecurring Basis [Line Items]
Goodwill, Impairment Charge	4,840
Goodwill, Fair Value	$ 2,400		$ 2,400

XML

OVERVIEW AND BASIS OF PRESENTATION - (Error Corrections And Prior Period Adjustments Of Condensed Consolidating Statements Of Cash Flows) (Detail) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Cash flows from operating activities:
Changes in assets and liabilities - accounts payable	$ 160	$ 792
Net cash provided by operating activities	43,088	34,796
Cash flows from investing activities:
Additions of property and equipment	(11,328)	(13,004)
Net cash used in investing activities	(11,238)	(12,943)
Net increase in cash and cash equivalents	5,988	6,959
As Reported [Member]
Cash flows from operating activities:
Changes in assets and liabilities - accounts payable		144
Net cash provided by operating activities		34,148
Cash flows from investing activities:
Additions of property and equipment		(12,356)
Net cash used in investing activities		(12,295)
Net increase in cash and cash equivalents		6,959
Adjustments [Member]
Cash flows from operating activities:
Changes in assets and liabilities - accounts payable		648
Net cash provided by operating activities		648
Cash flows from investing activities:
Additions of property and equipment		(648)
Net cash used in investing activities		$ (648)

XML

SEGMENT INFORMATION - (Selected Segment Financial Information For The Company's Reportable Segments) (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Segment Reporting Information [Line Items]
Total net revenue	$ 119,730	$ 118,001	$ 343,984	$ 339,713
Operating income	19,796	23,743	54,795	61,131
Interest expense	(12,481)	(10,461)	(36,820)	(34,757)
Other income	269	216	763	621
Income from continuing operations before income taxes	7,584	13,498	18,738	26,995
Recovery
Segment Reporting Information [Line Items]
Total net revenue	89,595	86,497	265,204	261,101
Operating income	30,128	26,065	82,888	84,978
Youth
Segment Reporting Information [Line Items]
Total net revenue	20,039	19,562	56,164	52,682
Operating income	960	1,891	1,158	(2,921)
Weight Management [Member]
Segment Reporting Information [Line Items]
Total net revenue	10,082	11,909	22,560	25,818
Operating income	(3,089)	3,037	(3,076)	3,853
Corporate [Member]
Segment Reporting Information [Line Items]
Total net revenue	14	33	56	112
Operating income	$ (8,203)	$ (7,250)	$ (26,175)	$ (24,779)

XML

LONG-TERM DEBT (Tables)

9 Months Ended

Sep. 30, 2012

Schedule Long-term Debt

Long-term debt at September 30, 2012 and December 31, 2011 consists of the following (in thousands):

	September 30, 2012			December 31, 2011
Term loans, net of discount of $2,982 in 2012	$	385,645		$	388,664
Revolving line of credit		27,000			36,500
Senior subordinated notes, net of discount of $880 in 2012 and $1,078 in 2011		176,416			176,218
Other		26			297
Total debt		589,087			601,679
Less: current portion of long-term debt		(145	)		(7,050	)
Total long-term debt	$	588,942		$	594,629

Percentages of Long Term Debt Maturities

The Company may redeem some or all of the Notes at the redemption prices (expressed as percentages of principal amount of Notes to be redeemed) set forth below, plus accrued and unpaid interest thereon, if redeemed during the twelve-month period beginning on February 1 of each of the years indicated below:

Year	Percentage
2013		101.792	%
2014 and thereafter		100.000	%

Components Interest Expense

Interest expense — The following table presents the components of interest expense (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Contractual interest on total debt	$	11,262		$	9,564		$	32,805		$	32,083
Amortization of debt discount and capitalized financing costs		1,355			1,009			4,369			3,005
Interest capitalized to property and equipment, net		(136	)		(112	)		(354	)		(331	)
Total interest expense	$	12,481		$	10,461		$	36,820		$	34,757

Scheduled Principal Payments of Total Debt

At September 30, 2012, currently scheduled principal payments of total debt, excluding the effects of the discounts on the term loans and the senior subordinated notes, are as follows (in thousands):

2012 (remaining 3 months)	$	26
2013		1,170
2014		4,193
2015		410,263
2016		177,296
Total	$	592,948

XML

STOCKHOLDERS EQUITY - (Narrative) (Detail) (USD $) In Millions, unless otherwise specified	9 Months Ended
	Sep. 30, 2012
Stockholders Equity [Line Items]
Distribution to/from Parent	$ 9.5

XML

LONG-TERM DEBT - (Senior Subordinated Notes Narrative) (Detail) (USD $) In Thousands, unless otherwise specified			9 Months Ended
	Sep. 30, 2012	Dec. 31, 2011	Sep. 30, 2012 Senior Subordinated Notes [Member]
Debt Instrument [Line Items]
Debt Instrument, Interest Rate, Stated Percentage			10.75%
Outstanding amount	$ 176,416	$ 176,218	$ 176,400
Senior subordinated notes, discount			$ 900
Debt instrument, maturity date			Feb. 01, 2016
Repurchase Notes Percentage of their face amount			101.00%

XML

INCOME TAXES - (Narrative) (Detail) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
Income Taxes [Line Items]
Effective tax rate	71.10%	49.10%	54.00%	45.00%
Effective income tax rate reconciliation, foreign income tax rate differential	35.00%	35.00%	35.00%	35.00%
Goodwill non-cash impairment charge	$ 4,840,000	$ 4,840,000	$ 4,840,000	$ 4,800
Cumulative unrecognized tax benefits	1,500,000		1,500,000		900,000
Balance of cumulative unrecognized tax benefits	1,500,000		1,500,000		900,000
Accrued payment of interest and penalties	$ 0.1		$ 0.1

XML

STOCK-BASED COMPENSATION - (Summary Of Activity Under The Group's Plans) (Detail) (USD $)	9 Months Ended
	Sep. 30, 2012
Option Shares
Balance	6,764,840
Granted	443,300
Exercised	(6,424)
Forfeited/cancelled/expired	(473,192)
Balance	6,728,224
Exercisable-September 30, 2012	3,197,024
Exercisable and expected to be exercisable	6,391,813
Weighted- Average Exercise Price Per Share
Balance	$ 7.31
Granted	$ 7.57
Exercised
Forfeited/cancelled/expired	$ 8.30
Balance	$ 7.27
Exercisable-September 30, 2012	$ 6.58
Exercisable and expected to be exercisable	$ 7.27

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CONDENSED CONSOLIDATING FINANCIAL INFORMATION (Condensed Consolidating Statements of Comprehensive Income) (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Comprehensive Income [Line Items]
Net income (loss)	$ 1,863	$ 2,750	$ 6,921	$ 6,215
Other comprehensive income:
Net change in unrealized gain on cash flow hedges (net of tax of $1,391)				2,106
Comprehensive income attributable to CRC Health Corporation	2,297	2,750	6,421	8,321
CRC Health Corporation [Member]
Comprehensive Income [Line Items]
Net income (loss)	2,297	2,750	6,421	6,215
Other comprehensive income:
Net change in unrealized gain on cash flow hedges (net of tax of $1,391)				2,106
Comprehensive income attributable to CRC Health Corporation				8,321
Subsidiary Guarantors [Member]
Comprehensive Income [Line Items]
Net income (loss)	1,787	2,645	6,577	4,243
Other comprehensive income:
Comprehensive income attributable to CRC Health Corporation				4,243
Eliminations [Member]
Comprehensive Income [Line Items]
Net income (loss)	(2,221)	(2,645)	(6,077)	(4,243)
Other comprehensive income:
Comprehensive income attributable to CRC Health Corporation				$ (4,243)

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FAIR VALUE MEASUREMENTS - (Estimated Fair Value Of Financial Instruments With Long-Term Maturities) (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Estimated Fair Value Of Financial Instruments [Line Items]
Term loans, net	$ 385,645	$ 388,664
Senior subordinated notes, net	176,416	176,218
Carrying Amount [Member]
Estimated Fair Value Of Financial Instruments [Line Items]
Loan program notes receivable, net	11,785	10,541
Term loans, net	385,645	388,664
Senior subordinated notes, net	176,416	176,218
Fair Value [Member]
Estimated Fair Value Of Financial Instruments [Line Items]
Loan program notes receivable, net	9,731	8,195
Term loans, net	394,081	370,268
Senior subordinated notes, net	$ 168,727	$ 162,854

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GOODWILL AND INTANGIBLE ASSETS

9 Months Ended

Sep. 30, 2012

GOODWILL AND INTANGIBLE ASSETS

2. GOODWILL AND INTANGIBLE ASSETS

Goodwill

Due to the decline in enrollment and revenues at the Company’s weight loss reporting unit during the three months ended September 30, 2012 and lowered forecasted future cash flows, the Company tested its weight loss reporting unit for possible impairment. As a result of this preliminary analysis, the Company recognized non-cash goodwill impairment of $4.8 million in the weight loss reporting unit of the weight management segment during the three months ended September 30, 2012. Such goodwill impairment charge is management’s best estimate of the impairment loss. The remaining goodwill in the weight loss reporting unit was $2.4 million as of September 30, 2012. Management expects to complete and finalize the measurement of the goodwill impairment prior to the end of the fiscal year, and any additional impairment loss will be recognized in the three months ending December 31, 2012.

Intangible Assets

Total intangible assets at September 30, 2012 and December 31, 2011 consist of the following (in thousands):

	September 30, 2012							December 31, 2011
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Intangible assets subject to amortization:
Referral network	$	17,177		(5,046	)	$	12,131	$	17,177	$	(4,402	)		12,775
Accreditations		7,142		(2,098	)		5,044		7,142		(1,831	)		5,311
Curriculum		4,650		(1,366	)		3,284		4,650		(1,191	)		3,459
Government contracts (including Medicaid)		34,967		(15,541	)		19,426		34,967		(13,793	)		21,174
Managed care contracts		14,500		(9,700	)		4,800		14,500		(8,605	)		5,895
Total intangible assets subject to amortization:	$	78,436	$	(33,751	)	$	44,685	$	78,436	$	(29,822	)	$	48,614
Intangible assets not subject to amortization:
Trademarks and trade names							170,632							170,632
Certificates of need							44,600							44,600
Regulatory licenses							37,501							37,501
Total intangible assets not subject to amortization							252,733							252,733
Total intangible assets						$	297,418						$	301,347

Total amortization expense for intangible assets subject to amortization was $1.3 million and $1.4 million for the three months ended September 30, 2012 and 2011, respectively, and $3.9 million and $4.1 million for the nine months ended September 30, 2012 and 2011, respectively.

In the first quarter of 2011, the Company recognized a non-cash impairment charge of $1.9 million related to intangible assets not subject to amortization in its youth division, which is included in the condensed consolidated statement of operations as goodwill and asset impairment. Also in the first quarter of 2011, the Company recognized a non-cash impairment charge of $2.1 million related to assets subject to amortization in its youth division, which is included in the condensed consolidated statement of operations as loss from discontinued operations, net of tax.

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CONDENSED CONSOLIDATING FINANCIAL INFORMATION (Condensed Consolidating Statements of Comprehensive Income) (Parenthetical) (Detail) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2011
Comprehensive Income [Line Items]
Net change in unrealized gain on cash flow hedges, tax	$ 1,391
CRC Health Corporation [Member]
Comprehensive Income [Line Items]
Net change in unrealized gain on cash flow hedges, tax	$ 1,391

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LONG-TERM DEBT - (Percentages Of Long-Term Debt Maturities) (Detail)	9 Months Ended
	Sep. 30, 2012
Debt Instrument [Line Items]
2013	101.792%
2014 and thereafter	100.00%

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DISCONTINUED OPERATIONS (Tables)

9 Months Ended

Sep. 30, 2012

Summary of Results of Discontinued Operations

The results of operations for those facilities classified as discontinued operations are summarized below (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Net client service revenues	$	1,090		$	1,630		$	1,365		$	11,114
Operating expenses		1,621			8,371			4,092			22,765
Asset impairment		—			—			—			2,454
Interest expense		—			(1	)		(1	)		(3	)
Other income		—			10			—			10
Loss before income taxes		(531	)		(6,732	)		(2,728	)		(14,098	)
Income tax benefit		(200	)		(2,613	)		(1,028	)		(5,473	)
Loss from discontinued operations	$	(331	)	$	(4,119	)	$	(1,700	)	$	(8,625	)

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RESTRUCTURING (Tables)

9 Months Ended

Sep. 30, 2012

Summary Of Restructuring Activity

A summary of activity under the FY11 and FY08 restructuring plans, all of which primarily relate to operating leases, including those classified as discontinued operations, is shown in the table below:

Restructuring reserve at December 31, 2011:
Recovery	$	1,596
Youth		8,287
Total restructuring reserve at December 31, 2011		9,883
Expenses:
Recovery		207
Youth		887
Total expenses		1,094
Cash payments:
Recovery		(347	)
Youth		(1,067	)
Total cash payment		(1,414	)
Restructuring reserve at September 30, 2012:
Recovery		1,456
Youth		8,107
Total restructuring reserve at September 30, 2012	$	9,563

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SEGMENT INFORMATION - (Narrative) (Detail)	9 Months Ended
	Sep. 30, 2012 Segment
Segment Reporting Information [Line Items]
Number of reportable segments	3
Number of customers that represent 10% or more of total net revenue in any period presented	0
Recovery
Segment Reporting Information [Line Items]
Number of states in which entity operates	21
Recovery | Inpatient Facilities [Member]
Segment Reporting Information [Line Items]
Number of patient facilities	29
Recovery | Outpatient Facilities [Member]
Segment Reporting Information [Line Items]
Number of patient facilities	16
Recovery | Comprehensive Treatment Centers [Member]
Segment Reporting Information [Line Items]
Number of patient facilities	57
Youth
Segment Reporting Information [Line Items]
Number of states in which entity operates	6
Youth | Adolescent And Young Adult Programs [Member]
Segment Reporting Information [Line Items]
Number of patient facilities	15
Weight Management [Member]
Segment Reporting Information [Line Items]
Number of patient facilities	21
Number of states in which entity operates	10
Weight Management [Member] | United Kingdom [Member]
Segment Reporting Information [Line Items]
Number of patient facilities	1

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LONG-TERM DEBT - (Components Of Interest Expenses) (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Debt Instrument [Line Items]
Total interest expense	$ 12,481	$ 10,461	$ 36,820	$ 34,757
Interest Expense [Member]
Debt Instrument [Line Items]
Contractual interest on total debt	11,262	9,564	32,805	32,083
Amortization of debt discount and capitalized financing costs	1,355	1,009	4,369	3,005
Interest capitalized to property and equipment, net	$ (136)	$ (112)	$ (354)	$ (331)

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SEGMENT INFORMATION (Tables)

9 Months Ended

Sep. 30, 2012

Selected Segment Financial Information For Company's Reportable Segments

Selected segment financial information for the Company’s reportable segments was as follows (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Net client service revenues:
Recovery	$	89,595		$	86,497		$	265,204		$	261,101
Youth		20,039			19,562			56,164			52,682
Weight management		10,082			11,909			22,560			25,818
Corporate		14			33			56			112
Total net client service revenues	$	119,730		$	118,001		$	343,984		$	339,713
Operating income (loss):
Recovery	$	30,128		$	26,065		$	82,888		$	84,978
Youth		960			1,891			1,158			(2,921	)
Weight management		(3,089	)		3,037			(3,076	)		3,853
Corporate		(8,203	)		(7,250	)		(26,175	)		(24,779	)
Operating income		19,796			23,743			54,795			61,131
Interest expense		(12,481	)		(10,461	)		(36,820	)		(34,757	)
Other income		269			216			763			621
Income from continuing operations before income taxes	$	7,584		$	13,498		$	18,738		$	26,995

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CONDENSED CONSOLIDATING FINANCIAL INFORMATION (Tables)

9 Months Ended

Sep. 30, 2012

Condensed Consolidating Balance Sheet

Condensed Consolidating Balance Sheet as of September 30, 2012

(In thousands) (Unaudited)

	CRC Health Corporation		Subsidiary Guarantors		Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	—	$	16,171	$	—			16,171
Restricted cash		315		—		—			315
Accounts receivable, net		—		37,423		—			37,423
Prepaid expenses		2,788		3,154		—			5,942
Other current assets		526		1,385		—			1,911
Deferred income taxes		6,365		—		—			6,365
Current assets of discontinued operations		—		352		—			352
Total current assets		9,994		58,485		—			68,479
Property and equipment, net		8,660		118,586		—			127,246
Goodwill		—		518,952		—			518,952
Other intangible assets, net		—		297,418		—			297,418
Other assets, net		20,975		502		—			21,477
Investment in subsidiaries		948,650		—		(948,650	)		—
Total assets	$	988,279	$	993,943	$	(948,650	)	$	1,033,572
Liabilities and equity
Current liabilities:
Accounts payable	$	4,852	$	1,126	$	—		$	5,978
Accrued liabilities		16,620		15,805		—			32,425
Income taxes payable		8,350		—		—			8,350
Current portion of long-term debt		119		26		—			145
Other current liabilities		1,006		12,080		—			13,086
Current liabilities of discontinued operations		—		2,668		—			2,668
Total current liabilities		30,947		31,705		—			62,652
Long-term debt		588,942		—		—			588,942
Other long-term liabilities		1,593		7,100		—			8,693
Long-term liabilities of discontinued operations		—		6,488		—			6,488
Deferred income taxes		103,249		—		—			103,249
Total liabilities		724,731		45,293		—			770,024
Total equity		263,548		948,650		(948,650	)		263,548
Total liabilities and equity	$	988,279	$	993,943	$	(948,650	)	$	1,033,572

Condensed Consolidating Balance Sheet as of December 31, 2011

(In thousands) (Unaudited)

	CRC Health Corporation		Subsidiary Guarantors		Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	—	$	10,183	$	—		$	10,183
Restricted cash		328		—		—			328
Accounts receivable, net		—		36,196		—			36,196
Prepaid expenses		5,179		3,193		—			8,372
Other current assets		571		2,067		—			2,638
Income taxes receivable		516		—		—			516
Deferred income taxes		6,365		—		—			6,365
Current assets of discontinued operations		—		1,261		—			1,261
Total current assets		12,959		52,900		—			65,859
Property and equipment, net		9,993		116,847		—			126,840
Goodwill		—		523,792		—			523,792
Other intangible assets, net		—		301,347		—			301,347
Other assets, net		20,635		484		—			21,119
Investment in subsidiaries		951,669		—		(951,669	)		—
Total assets	$	995,256	$	995,370	$	(951,669	)	$	1,038,957
Liabilities and equity
Current liabilities:
Accounts payable	$	3,670	$	1,324	$	—		$	4,994
Accrued liabilities		18,414		13,625		—			32,039
Current portion of long-term debt		6,771		279		—			7,050
Other current liabilities		863		11,749		—			12,612
Current liabilities of discontinued operations		—		2,511		—			2,511
Total current liabilities		29,718		29,488		—			59,206
Long-term debt		594,629		—		—			594,629
Other long-term liabilities		915		7,416		—			8,331
Long-term liabilities of discontinued operations		—		6,797		—			6,797
Deferred income taxes		105,040		—		—			105,040
Total liabilities		730,302		43,701		—			774,003
Total equity		264,954		951,669		(951,669	)		264,954
Total liabilities and equity	$	995,256	$	995,370	$	(951,669	)	$	1,038,957

Condensed Consolidating Statements of Operations

Condensed Consolidating Statements of Operations

For the Three Months Ended September 30, 2012

(In thousands) (Unaudited)

	CRC Health Corporation			Subsidiary Guarantors			Eliminations			Consolidated
Net revenues:
Net client service revenues	$	14		$	119,716		$	—		$	119,730
Management fee revenues		20,672			—			(20,672	)		—
Total net revenues		20,686			119,716			(20,672	)		119,730
Operating expenses:
Salaries and benefits		6,420			46,937			—			53,357
Supplies, facilities and other operating costs		691			34,218			—			34,909
Provision for doubtful accounts		—			1,908			—			1,908
Depreciation and amortization		1,107			3,813			—			4,920
Goodwill impairment		—			4,840			—			4,840
Management fee expense		—			20,672			(20,672	)		—
Total operating expenses		8,218			112,388			(20,672	)		99,934
Operating income		12,468			7,328			—			19,796
Interest expense		(12,474	)		(7	)		—			(12,481	)
Other income		267			2			—			269
Income from continuing operations before income taxes		261			7,323			—			7,584
Income tax expense		185			5,205			—			5,390
Equity in income of subsidiaries, net of tax		2,221			—			(2,221	)		—
Income from continuing operations		2,297			2,118			(2,221	)		2,194
Loss from discontinued operations, net of tax		—			(331	)		—			(331	)
Net income		2,297			1,787			(2,221	)		1,863
Net income attributable to noncontrolling interest		—			434			—			434
Net income attributable to CRC Health Corporation	$	2,297		$	2,221		$	(2,221	)	$	2,297

Condensed Consolidating Statements of Operations

For the Three Months Ended September 30, 2011

(In thousands) (Unaudited)

	CRC Health Corporation			Subsidiary Guarantors			Eliminations			Consolidated
Net revenues:
Net client service revenues	$	33		$	117,968		$	—		$	118,001
Management fee revenues		17,615			—			(17,615	)		—
Total net revenues		17,648			117,968			(17,615	)		118,001
Operating expenses:
Salaries and benefits		3,881			47,941			—			51,822
Supplies, facilities and other operating costs		2,148			32,725			—			34,873
Provision for doubtful accounts		—			2,572			—			2,572
Depreciation and amortization		1,184			3,807			—			4,991
Management fee expense		—			17,615			(17,615	)		—
Total operating expenses		7,213			104,660			(17,615	)		94,258
Operating income		10,435			13,308			—			23,743
Interest expense		(10,439	)		(22	)		—			(10,461	)
Other income		210			6			—			216
Income from continuing operations before income taxes		206			13,292			—			13,498
Income tax expense		101			6,528			—			6,629
Equity in income of subsidiaries, net of tax		2,645			—			(2,645	)		—
Income from continuing operations		2,750			6,764			(2,645	)		6,869
Loss from discontinued operations, net of tax		—			(4,119	)		—			(4,119	)
Net income	$	2,750		$	2,645		$	(2,645	)	$	2,750

Condensed Consolidating Statements of Operations

For the Nine Months Ended September 30, 2012

(In thousands) (Unaudited)

	CRC Health Corporation			Subsidiary Guarantors			Eliminations			Consolidated
Net revenues:
Net client service revenues	$	57		$	343,927		$	—		$	343,984
Management fee revenues		62,958			—			(62,958	)		—
Total net revenues		63,015			343,927			(62,958	)		343,984
Operating expenses:
Salaries and benefits		20,185			141,908			—			162,093
Supplies, facilities and other operating costs		2,765			99,057			—			101,822
Provision for doubtful accounts		—			5,782			—			5,782
Depreciation and amortization		3,282			11,370			—			14,652
Goodwill impairment		—			4,840			—			4,840
Management fee expense		—			62,958			(62,958	)		—
Total operating expenses		26,232			325,915			(62,958	)		289,189
Operating income		36,783			18,012			—			54,795
Interest expense		(36,789	)		(31	)		—			(36,820	)
Other income		754			9			—			763
Income from continuing operations before income taxes		748			17,990			—			18,738
Income tax expense (benefit)		404			9,713			—			10,117
Equity in income of subsidiaries, net of tax		6,077			—			(6,077	)		—
Income from continuing operations		6,421			8,277			(6,077	)		8,621
Loss from discontinued operations, net of tax		—			(1,700	)		—			(1,700	)
Net income		6,421			6,577			(6,077	)		6,921
Net loss attributable to noncontrolling interest		—			(500	)		—			(500	)
Net income attributable to CRC Health Corporation	$	6,421		$	6,077		$	(6,077	)	$	6,421

Condensed Consolidating Statements of Operations

For the Nine Months Ended September 30, 2011

(In thousands) (Unaudited)

	CRC Health Corporation			Subsidiary Guarantors			Eliminations			Consolidated
Net revenues:
Net client service revenues	$	136		$	339,577		$	—		$	339,713
Management fee revenues		59,738			—			(59,738	)		—
Total net revenues		59,874			339,577			(59,738	)		339,713
Operating expenses:
Salaries and benefits		12,787			142,150			—			154,937
Supplies, facilities and other operating costs		6,229			94,354			—			100,583
Provision for doubtful accounts		—			6,426			—			6,426
Depreciation and amortization		3,303			11,386			—			14,689
Asset impairment		—			1,947			—			1,947
Management fee expense		—			59,738			(59,738	)		—
Total operating expenses		22,319			316,001			(59,738	)		278,582
Operating income (loss)		37,555			23,576			—			61,131
Interest expense		(34,574	)		(183	)		—			(34,757	)
Other income		606			15			—			621
Income from continuing operations before income taxes		3,587			23,408			—			26,995
Income tax expense		1,615			10,540			—			12,155
Equity in income of subsidiaries, net of tax		4,243			—			(4,243	)		—
Income from continuing operations		6,215			12,868			(4,243	)		14,840
Loss from discontinued operations, net of tax		—			(8,625	)		—			(8,625	)
Net income	$	6,215		$	4,243		$	(4,243	)	$	6,215

Condensed Consolidating Statements of Comprehensive Income

Condensed Consolidating Statements of Comprehensive Income

For the Nine Months Ended September 30, 2011

(In thousands) (Unaudited)

	CRC Health Corporation		Subsidiary Guarantors		Eliminations			Consolidated
Net income (loss)	$	6,215	$	4,243	$	(4,243	)	$	6,215
Other comprehensive income:
Net change in unrealized gain on cash flow hedges (net of tax of $1,391)		2,106		—		—			2,106
Total comprehensive income (loss)	$	8,321	$	4,243	$	(4,243	)	$	8,321

Condensed Consolidating Statements of Cash Flows

Condensed Consolidating Statements of Cash Flows

For the Nine Months Ended September 30, 2012

(In thousands) (Unaudited)

	CRC Health Corporation			Subsidiary Guarantors			Eliminations		Consolidated
Cash flows from operating activities:
Net cash provided by operating activities	$	18,658		$	24,430		$	—	$	43,088
Cash flows from investing activities:
Additions of property and equipment		(2,848	)		(8,480	)		—		(11,328	)
Proceeds from the sale of property and equipment		—			691			—		691
Acquisition of non-controlling interest		—			(500	)		—		(500	)
Other investing activities		(101	)		—			—		(101	)
Net cash used in investing activities		(2,949	)		(8,289	)		—		(11,238	)
Cash flows from financing activities:
Intercompany transfers		9,673			(9,673	)		—		—
Borrowings of long-term debt		84,096			—			—		84,096
Repayment of long-term debt		(87,638	)		(480	)		—		(88,118	)
Borrowings on revolving line of credit		18,000			—			—		18,000
Repayments on revolving line of credit		(27,500	)		—			—		(27,500	)
Capital distributed to Parent		(9,554	)		—			—		(9,554	)
Capitalized financing costs		(2,786	)		—			—		(2,786	)
Net cash (used in) provided by financing activities		(15,709	)		(10,153	)		—		(25,862	)
Net increase in cash and cash equivalents		—			5,988			—		5,988
Cash and cash equivalents — beginning of period		—			10,183			—		10,183
Cash and cash equivalents — end of period	$	—		$	16,171		$	—	$	16,171

Condensed Consolidating Statements of Cash Flows

For the Nine Months Ended September 30, 2011

(In thousands) (Unaudited)

	CRC Health Corporation			Subsidiary Guarantors			Eliminations		Consolidated
Cash flows from operating activities:
Net cash provided by operating activities	$	11,038		$	23,758		$	—	$	34,796
Cash flows from investing activities:
Additions of property and equipment		(4,432	)		(8,572	)		—		(13,004	)
Proceeeds from the same of property and equipment		—			152			—		152
Other investing activities		(91	)		—			—		(91	)
Net cash used in investing activities		(4,523	)		(8,420	)		—		(12,943	)
Cash flows from financing activities:
Intercompany transfers		5,467			(5,467	)		—		—
Repayment of long-term debt		(9,697	)		(2,912	)		—		(12,609	)
Borrowings on revolving line of credit		9,500			—			—		9,500
Repayments on revolving line of credit		(7,000	)		—			—		(7,000	)
Capital distributed to Parent		(1,616	)		—			—		(1,616	)
Capitalized financing costs		(3,169	)		—			—		(3,169	)
Net cash used in financing activities		(6,515	)		(8,379	)		—		(14,894	)
Net increase in cash and cash equivalents		—			6,959			—		6,959
Cash and cash equivalents — beginning of period		—			7,111			—		7,111
Cash and cash equivalents — end of period	$	—		$	14,070		$	—	$	14,070

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OVERVIEW AND BASIS OF PRESENTATION

9 Months Ended

Sep. 30, 2012

OVERVIEW AND BASIS OF PRESENTATION

1. OVERVIEW AND BASIS OF PRESENTATION

Overview

CRC Health Corporation (“the Company”) is a wholly owned subsidiary of CRC Health Group, Inc., referred to as “the Group” or “the Parent.” The Company is headquartered in Cupertino, California, and through its wholly owned subsidiaries provides treatment services related to substance abuse, troubled youth and other addiction diseases and behavioral disorders.

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X, without audit. Accordingly, they do not include all of the information required by accounting principles generally accepted in the United States of America for annual financial statements. The unaudited condensed consolidated balance sheet as of December 31, 2011 has been derived from our audited financial statements.

In the opinion of management, these unaudited condensed consolidated financial statements contain all adjustments, consisting of normal recurring adjustments, necessary to present fairly the financial position of the Company, its results of operations, and its cash flows. These unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and the notes thereto for the year ended December 31, 2011.

Principles of Consolidation — The Company’s condensed consolidated financial statements include the accounts of CRC Health Corporation and its consolidated subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates — Preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the Company’s condensed consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates.

Reclassifications: Discontinued Operations — The condensed consolidated statements of operations have been reclassified for all periods presented to reflect the presentation of closed or sold facilities as discontinued operations (see Note 11). Unless noted otherwise, discussions in the notes to the condensed consolidated financial statements pertain to continuing operations.

Out of Period Adjustments — Subsequent to the issuance of March 31, 2012 condensed consolidated financial statements, the Company determined that:

• The (i) condensed consolidated statements of operations for the six months ended June 30, 2011 included $0.9 million in “supplies, facilities and other operating costs” that should have been recorded in “net loss attributable to noncontrolling interest,” and (ii) the condensed consolidated balance sheets as of December 31, 2011 included such $0.9 million in “accrued liabilities” that should have been presented outside of permanent equity as “redeemable noncontrolling interest” (see Note 7). Because the amount was not material to the results of operations or financial position as of and for any of such previous fiscal periods or to the fiscal periods ended June 30, 2012, the Company recorded an adjustment to record such expense of $0.9 million in “supplies, facilities and other operating costs,” in the condensed consolidated statements of operations during the fiscal period ended June 30, 2012.

• Leasehold improvements aggregating $0.4 million should have been written off and included in “supplies, facilities and other operating costs” during the periods from 2009 through 2011. Because the amount was not material to the results of operations or financial position as of and for any of such previous fiscal periods or to the fiscal periods ended June 30, 2012, the Company recorded an adjustment to record such expense of $0.4 million in “supplies, facilities and other operating costs,” in the condensed consolidated statements of operations during the fiscal period ended June 30, 2012.

• Management fees payable to the Company’s principal shareholder of $0.7 million related to reimbursement in connection with services provided pursuant to the management agreement, should have been expensed in “supplies, facilities and other operating costs” in 2011. Because the amount was not material to the results of operations or financial position as of and for any of such previous fiscal periods or to the fiscal periods ended June 30, 2012, the Company recorded an adjustment to record such expense of $0.7 million in “supplies, facilities and other operating costs,” in the condensed consolidated statements of operations during the fiscal period ended June 30, 2012.

The net impact of the out of period adjustments described above decreased “operating income” by $0.2 million, increased “net loss attributable to noncontrolling interest” by $0.9 million, and decreased “net income attributable to CRC Health Corporation” by $1.1 million for the fiscal period ended June 30, 2012.

Presentation and Disclosure Corrections — The Company determined that:

• Interest income of $0.2 million and $0.6 million during the three and nine months ended September 30, 2011, previously included in “interest expense, net,” in the condensed consolidated statements of operations for the three and nine months ended September 30, 2011, should be included in “other income.” Accordingly, the presentation in the condensed consolidated statement of operations for the three and nine months ended September 30, 2011 has been corrected.

• Purchases of property and equipment included in accounts payable of $0.3 million at September 30, 2011, should have been presented and disclosed as a noncash investing activity. Accordingly, the condensed consolidated statement of cash flows for the nine months ended September 30, 2011 has been corrected as follows (in thousands):

	Nine Months Ended September 30, 2011
	As Reported			Adjustments			As Corrected
Cash flows from operating activities:
Changes in assets and liabilities - accounts payable	$	144		$	648		$	792
Net cash provided by operating activities		34,148			648			34,796
Cash flows from investing activities:
Additions of property and equipment		(12,356	)		(648	)		(13,004	)
Net cash used in investing activities		(12,295	)		(648	)		(12,943	)
Net increase in cash and cash equivalents	$	6,959		$	—		$	6,959

Recently Adopted Pronouncements — The Financial Accounting Standards Board (“FASB”) Accounting Standards Update issued (“ASU”) No. 2012-02, Intangibles—Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment, permits an entity to assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative impairment test. If the entity determines that it is not more likely than not that the asset is impaired, it would have the option to forgo the annual calculation of the fair value of an indefinite-lived intangible asset. The updated guidance will be effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. The adoption of the new guidance will not have a material impact on the Company’s condensed consolidated financial statements.

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OVERVIEW AND BASIS OF PRESENTATION - (Narrative) (Detail) (USD $)	3 Months Ended		6 Months Ended	9 Months Ended		6 Months Ended		12 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Jun. 30, 2012	Sep. 30, 2012	Sep. 30, 2011	Jun. 30, 2012 Prior Period Adjustment [Member]	Jun. 30, 2011 Prior Period Adjustment [Member]	Dec. 31, 2011 Prior Period Adjustment [Member]
Introduction And Basis Of Presentation [Line Items]
Net loss attributable to noncontrolling interest	$ (434,000)		$ 900,000	$ 500,000			$ 900,000
Redeemable noncontrolling interest						900,000		900,000
Leasehold assets, Write off before tax						400,000
Management Fees			700,000
Decrease in operating income			200,000
Decrease in net income			1,100,000
Interest income		200,000			600,000
Purchases of property and equipment included in accounts payable				$ 1,264,000	$ 334,000

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LONG-TERM DEBT - (Term Loans Narrative) (Detail) (USD $)	3 Months Ended			1 Months Ended	3 Months Ended	1 Months Ended	3 Months Ended	9 Months Ended
	Mar. 31, 2012 Term Loans [Member]	Mar. 31, 2011 Term Loans [Member]	Mar. 31, 2010 Term Loans [Member]	Mar. 07, 2012 Term Loans B-1 [Member]	Mar. 31, 2012 Term Loans B-1 [Member]	Mar. 07, 2012 Term Loans B-3 [Member]	Mar. 31, 2012 Term Loans B-3 [Member]	Sep. 30, 2012 Term Loans B-3 [Member]	Sep. 30, 2012 Term Loans B-3 [Member] September 30, 2013 [Member]	Sep. 30, 2012 Term Loans B-3 [Member] Between December 31, 2013 and September 30, 2015 [Member]	Sep. 30, 2012 Term Loans B-2 [Member]	Sep. 30, 2012 Term Loans B-2 [Member] September 30, 2013 [Member]	Sep. 30, 2012 Term Loans B-2 [Member] Between December 31, 2013 and September 30, 2015 [Member]
Debt Instrument [Line Items]
Aggregate principal amount				$ 80,900,000							$ 302,500,000
Cash proceeds						87,600,000
Debt instrument, maturity date								Nov. 16, 2015			Nov. 16, 2015
Total aggregate principal amount from new creditors						67,000,000
Total aggregate principal amount from existing Term Loan B-1 creditors						20,600,000
Contributed as additional Term Loan						6,100,000
Repaid of aggregate principal Term Loans				66,400,000
Remaining unamortized issuance costs					200,000
Refinancing costs					500,000
Remaining debt issuance costs							2,200,000
Discount amortized, percentage							4.00%
Amendment of debt						14,500,000
Aggregate principal amount								83,100,000
Debt discount								3,000,000
Debt instrument, credit rating								(i) for LIBOR loans for any interest period, a rate per annum equal to the LIBOR rate as determined by the administrative agent (but not less than 1.50%), plus an applicable margin of 7.00%, subject to an increase to 8.00% during any period that the Company's public corporate family rating from Moody's is not at least B3 or the Company's public corporate credit rating from Standard & Poor's Ratings Services ("S&P") is not at least B-, and (ii) for base rate loans, a rate per annum equal to the greater of (x) the prime rate of the administrative agent and (y) the federal funds rate plus one-half of 1.00% (but, in either case, not less than 2.50%), plus an applicable margin of 6.00%, subject to an increase to 7.00% during any period that the Company's public corporate family rating from Moody's is not at least B3 or the Company's public corporate rating credit rating from S&P is not at least B-.
LIBOR loans and the interest rate								8.50%			4.86%
Term loan payable terms								The Term Loans B-3 are payable in quarterly principal installments of less than $0.1 million on September 30, 2013 and $0.2 million over the payment period between December 31, 2013 and September 30, 2015, with the remainder due on the maturity date of November 16, 2015			The Term Loans B-2 are payable in quarterly principal installments of $0.1 million on September 30, 2013 and $0.8 million over the payment period between December 31, 2013 and September 30, 2015, with the remainder due on the maturity date of November 16, 2015.
Periodic payment of term loans									100,000	200,000
Refinancing terms								Under the terms of this refinancing, the Company is required to pay (i) on March 31, 2013, a fee equal to 1.00% of the outstanding principal amount of such lender's Term Loans B-3 as of such date, (ii) on March 31, 2014, a fee equal to 1.50% of the outstanding principal amount of such lender's Term Loans B-3 as of such date and (iii) on the Maturity Date, a fee equal to 1.50% of the outstanding principal amount of such lender's Term Loans B-3 as of such date. These fees are charged to interest expense over the term of the Term Loans B-3 using the effective interest rate method.
Rate of prepayment premium								1.00%
Line of Credit interest rate term											(i) for LIBOR loans for any interest period, a rate per annum equal to the LIBOR rate as determined by the administrative agent, plus an applicable margin of 4.50% and (ii) for base rate loans, a rate per annum equal to the greater of (x) the prime rate of the administrative agent and (y) the federal funds rate plus one-half of 1.00%, plus an applicable margin of 3.50%.
Periodic payment of term loans												100,000	800,000
Repaid of aggregate principal Term Loans	$ 6,800,000	$ 9,600,000	$ 7,300,000

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RESTRUCTURING - (Narrative) (Detail) (USD $)	Sep. 30, 2012	Dec. 31, 2011
Restructuring Cost and Reserve [Line Items]
Restructuring reserve	$ 9,563	$ 9,883
FY11 Plan [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring reserve	4,900,000
FY08 Plan[Member]
Restructuring Cost and Reserve [Line Items]
Restructuring reserve	$ 4,700,000

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CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Assets
Cash and cash equivalents	$ 16,171	$ 10,183
Restricted cash	315	328
Accounts receivable (net of allowance for doubtful accounts of $5,171 in 2012 and $6,476 in 2011)	37,423	36,196
Prepaid expenses	5,942	8,372
Other current assets	1,911	2,638
Income taxes receivable		516
Deferred income taxes	6,365	6,365
Current assets of discontinued operations	352	1,261
Total current assets	68,479	65,859
Property and equipment (net of accumulated depreciation of $74,563 in 2012 and $64,456 in 2011)	127,246	126,840
Goodwill	518,952	523,792
Other intangible assets, net	297,418	301,347
Other assets, net	21,477	21,119
Total assets	1,033,572	1,038,957
Liabilities and stockholders' equity
Accounts payable	5,978	4,994
Accrued liabilities	32,425	32,039
Income taxes payable	8,350
Current portion of long-term debt	145	7,050
Other current liabilities	13,086	12,612
Current liabilities of discontinued operations	2,668	2,511
Total current liabilities	62,652	59,206
Long-term debt	588,942	594,629
Other long-term liabilities	8,693	8,331
Long-term liabilities of discontinued operations	6,488	6,797
Deferred income taxes	103,249	105,040
Total liabilities	770,024	774,003
Commitments and contingencies
Common stock, $0.001 par value - 1,000 shares authorized, issued and outstanding
Additional paid-in capital	460,478	468,305
Accumulated deficit	(196,930)	(203,351)
Total equity	263,548	264,954
Total liabilities and equity	$ 1,033,572	$ 1,038,957

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LONG-TERM DEBT - (Scheduled Principal Payments Of Total Debt) (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012
Debt Instrument [Line Items]
2012 (remaining 3 months)	$ 26
2013	1,170
2014	4,193
2015	410,263
2016	177,296
Total	$ 592,948

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) (Parenthetical) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2011
Net change in unrealized gain on cash flow hedges, tax	$ 1,391

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CONDENSED CONSOLIDATING FINANCIAL INFORMATION - (Condensed Consolidating Balance Sheet) (Detail) (USD $)	Sep. 30, 2012	Dec. 31, 2011	Sep. 30, 2011	Dec. 31, 2010
Current assets:
Cash and cash equivalents	$ 16,171,000	$ 10,183,000	$ 14,070,000	$ 7,111,000
Restricted cash	315,000	328,000
Accounts receivable, net	37,423,000	36,196,000
Prepaid expenses	5,942,000	8,372,000
Other current assets	1,911,000	2,638,000
Income taxes receivable		516,000
Deferred income taxes	6,365,000	6,365,000
Current assets of discontinued operations	352,000	1,261,000
Total current assets	68,479,000	65,859,000
Property and equipment, net	127,246,000	126,840,000
Goodwill	518,952,000	523,792,000
Other intangible assets, net	297,418,000	301,347,000
Other assets, net	21,477,000	21,119,000
Total assets	1,033,572,000	1,038,957,000
Current liabilities:
Accounts payable	5,978,000	4,994,000
Accrued liabilities	32,425,000	32,039,000
Income taxes payable	8,350,000
Current portion of long-term debt	145,000	7,050,000
Other current liabilities	13,086,000	12,612,000
Current liabilities of discontinued operations	2,668,000	2,511,000
Total current liabilities	62,652,000	59,206,000
Long-term debt	588,942,000	594,629,000
Other long-term liabilities	8,693,000	8,331,000
Long-term liabilities of discontinued operations	6,488,000	6,797,000
Deferred income taxes	103,249,000	105,040,000
Total liabilities	770,024,000	774,003,000
Total equity	263,548,000	264,954,000
Total liabilities and equity	1,033,572,000	1,038,957,000
CRC Health Corporation [Member]
Current assets:
Restricted cash	315,000	328,000
Prepaid expenses	2,788,000	5,179,000
Other current assets	526,000	571,000
Income taxes receivable		516,000
Deferred income taxes	6,365,000	6,365,000
Total current assets	9,994,000	12,959,000
Property and equipment, net	8,660,000	9,993,000
Other assets, net	20,975,000	20,635,000
Investment in subsidiaries	948,650,000	951,669,000
Total assets	988,279,000	995,256,000
Current liabilities:
Accounts payable	4,852,000	3,670,000
Accrued liabilities	16,620,000	18,414,000
Income taxes payable	8,350,000
Current portion of long-term debt	119,000	6,771,000
Other current liabilities	1,006,000	863,000
Total current liabilities	30,947,000	29,718,000
Long-term debt	588,942,000	594,629,000
Other long-term liabilities	1,593,000	915,000
Deferred income taxes	103,249,000	105,040,000
Total liabilities	724,731,000	730,302,000
Total equity	263,548,000	264,954,000
Total liabilities and equity	988,279,000	995,256,000
Subsidiary Guarantors [Member]
Current assets:
Cash and cash equivalents	16,171,000	10,183,000	14,070,000	7,111,000
Accounts receivable, net	37,423,000	36,196,000
Prepaid expenses	3,154,000	3,193,000
Other current assets	1,385,000	2,067,000
Current assets of discontinued operations	352,000	1,261,000
Total current assets	58,485,000	52,900,000
Property and equipment, net	118,586,000	116,847,000
Goodwill	518,952,000	523,792,000
Other intangible assets, net	297,418,000	301,347,000
Other assets, net	502,000	484,000
Total assets	993,943,000	995,370,000
Current liabilities:
Accounts payable	1,126,000	1,324,000
Accrued liabilities	15,805,000	13,625,000
Current portion of long-term debt	26,000	279,000
Other current liabilities	12,080,000	11,749,000
Current liabilities of discontinued operations	2,668,000	2,511,000
Total current liabilities	31,705,000	29,488,000
Other long-term liabilities	7,100,000	7,416,000
Long-term liabilities of discontinued operations	6,488,000	6,797,000
Total liabilities	45,293,000	43,701,000
Total equity	948,650,000	951,669,000
Total liabilities and equity	993,943,000	995,370,000
Eliminations [Member]
Current assets:
Investment in subsidiaries	(948,650,000)	(951,669,000)
Total assets	(948,650,000)	(951,669,000)
Current liabilities:
Total equity	(948,650,000)	(951,669,000)
Total liabilities and equity	$ (948,650,000)	$ (951,669,000)

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GOODWILL AND INTANGIBLE ASSETS - (Total Intangible Assets) (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Indefinite And Finite Lived Intangible Assets [Line Items]
Intangible assets subject to amortization, Gross Carrying Amount	$ 78,436	$ 78,436
Intangible assets subject to amortization, Accumulated Amortization	(33,751)	(29,822)
Intangible assets subject to amortization, Net Carrying Amount	44,685	48,614
Intangible assets not subject to amortization, Net Carrying Amount	252,733	252,733
Total intangible assets, Net Carrying Amount	297,418	301,347
Trademarks And Trade Names [Member]
Indefinite And Finite Lived Intangible Assets [Line Items]
Intangible assets not subject to amortization, Net Carrying Amount	170,632	170,632
Certificates Of Need [Member]
Indefinite And Finite Lived Intangible Assets [Line Items]
Intangible assets not subject to amortization, Net Carrying Amount	44,600	44,600
Regulatory Licenses
Indefinite And Finite Lived Intangible Assets [Line Items]
Intangible assets not subject to amortization, Net Carrying Amount	37,501	37,501
Referral Network [Member]
Indefinite And Finite Lived Intangible Assets [Line Items]
Intangible assets subject to amortization, Gross Carrying Amount	17,177	17,177
Intangible assets subject to amortization, Accumulated Amortization	(5,046)	(4,402)
Intangible assets subject to amortization, Net Carrying Amount	12,131	12,775
Accreditations [Member]
Indefinite And Finite Lived Intangible Assets [Line Items]
Intangible assets subject to amortization, Gross Carrying Amount	7,142	7,142
Intangible assets subject to amortization, Accumulated Amortization	(2,098)	(1,831)
Intangible assets subject to amortization, Net Carrying Amount	5,044	5,311
Curriculum [Member]
Indefinite And Finite Lived Intangible Assets [Line Items]
Intangible assets subject to amortization, Gross Carrying Amount	4,650	4,650
Intangible assets subject to amortization, Accumulated Amortization	(1,366)	(1,191)
Intangible assets subject to amortization, Net Carrying Amount	3,284	3,459
Government Contracts -(Including Medicaid) [Member]
Indefinite And Finite Lived Intangible Assets [Line Items]
Intangible assets subject to amortization, Gross Carrying Amount	34,967	34,967
Intangible assets subject to amortization, Accumulated Amortization	(15,541)	(13,793)
Intangible assets subject to amortization, Net Carrying Amount	19,426	21,174
Managed Care Contracts [Member]
Indefinite And Finite Lived Intangible Assets [Line Items]
Intangible assets subject to amortization, Gross Carrying Amount	14,500	14,500
Intangible assets subject to amortization, Accumulated Amortization	(9,700)	(8,605)
Intangible assets subject to amortization, Net Carrying Amount	$ 4,800	$ 5,895

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OVERVIEW AND BASIS OF PRESENTATION (Tables)

9 Months Ended

Sep. 30, 2012

Error Corrections and Prior Period Adjustments of Condensed Consolidating Statements of Cash Flows

Accordingly, the condensed consolidated statement of cash flows for the nine months ended September 30, 2011 has been corrected as follows (in thousands):

	Nine Months Ended September 30, 2011
	As Reported			Adjustments			As Corrected
Cash flows from operating activities:
Changes in assets and liabilities - accounts payable	$	144		$	648		$	792
Net cash provided by operating activities		34,148			648			34,796
Cash flows from investing activities:
Additions of property and equipment		(12,356	)		(648	)		(13,004	)
Net cash used in investing activities		(12,295	)		(648	)		(12,943	)
Net increase in cash and cash equivalents	$	6,959		$	—		$	6,959

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INCOME TAXES (Income Tax Expense for Interim Periods) (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Income Taxes [Line Items]
Income tax expense from continuing operations	$ 5,390	$ 6,629	$ 10,117	$ 12,155
Effective tax rate	71.10%	49.10%	54.00%	45.00%

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INCOME TAXES (Tables)

9 Months Ended

Sep. 30, 2012

Income Tax Expense for Interim Periods

The Company calculates its income tax expense for interim periods by applying the full year’s estimated effective tax rate in its financial statements for interim periods (in thousands, except percentages).

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Income tax expense from continuing operations	$	5,390		$	6,629		$	10,117		$	12,155
Effective tax rate		71.1	%		49.1	%		54.0	%		45.0	%

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Cash flows from operating activities:
Net income	$ 6,921	$ 6,215
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	14,791	14,753
Amortization of debt discount and capitalized financing costs	4,369	3,043
Goodwill and asset impairment	4,840	4,401
Loss (gain) on disposal of property and equipment	1,022	(125)
Provision for doubtful accounts	5,917	6,604
Stock-based compensation	1,727	2,060
Deferred income taxes	(1,791)
Other operating activities		(38)
Changes in assets and liabilities:
Restricted cash	13	102
Accounts receivable	(7,014)	(10,935)
Prepaid expenses	2,410	2,889
Income taxes receivable and payable	8,865	4,628
Other current assets	729	(246)
Accounts payable	160	792
Accrued liabilities	842	240
Other current liabilities	422	(767)
Other long-term assets	(1,186)	(2,091)
Other long-term liabilities	51	3,271
Net cash provided by operating activities	43,088	34,796
Cash flows from investing activities:
Additions of property and equipment	(11,328)	(13,004)
Proceeds from sale of property and equipment	691	152
Acquisition of non-controlling interest	(500)
Other investing activities	(101)	(91)
Net cash used in investing activities	(11,238)	(12,943)
Cash flows from financing activities:
Borrowings of long-term debt	84,096
Repayment of long-term debt	(88,118)	(12,609)
Borrowings on revolving line of credit	18,000	9,500
Repayments on revolving line of credit	(27,500)	(7,000)
Capital distributed to Parent	(9,554)	(3,169)
Capitalized financing costs	(2,786)	(1,616)
Net cash used in financing activities	(25,862)	(14,894)
Net increase in cash and cash equivalents	5,988	6,959
Cash and cash equivalents - beginning of period	10,183	7,111
Cash and cash equivalents - end of period	16,171	14,070
Supplemental disclosure of noncash investing and financing activities:
Purchases of property and equipment included in accounts payable	1,264	334
Payable related to acquisition	48	185
Supplemental disclosure of cash flow information:
Cash paid for interest	36,099	36,558
Cash paid for income taxes, net of refunds	$ 1,257	$ 2,054

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CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Accounts receivable, Allowance for doubtful accounts	$ 5,171	$ 6,476
Accumulated depreciation - Plant and Equipment	$ 74,563	$ 64,456
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	1,000	1,000
Common stock, shares issued	1,000	1,000
Common stock, shares outstanding	1,000	1,000

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RESTRUCTURING

9 Months Ended

Sep. 30, 2012

RESTRUCTURING

10. RESTRUCTURING

On March 24, 2011, the Company announced a plan to transition the services provided within its youth division to a more focused national network of services. Additionally, as a part of a plan to align Company’s resources with its business plan, management initiated restructuring of certain of its administrative functions at its corporate headquarters and other divisions during 2011. Collectively, this plan is referred to as the FY11 plan. As of September 30, 2012, the remaining restructuring reserve consists of future rental payments. These future rental payments, net of estimated sublease income, related to operating lease obligations are expected to continue through fiscal 2020. As of September 30, 2012, the restructuring reserve for the FY11 plan was $4.9 million.

In the second half of fiscal 2008, management initiated a restructuring plan (the “FY08 Plan”) to align the Company’s resources with its business plan by initiating facility consolidations, facility exit actions and certain workforce reductions. As of September 30, 2012, the remaining restructuring reserve consists of future rental payments. These future rental payments, net of estimated sublease income, are expected to continue through fiscal 2018. As of September 30, 2012, the restructuring reserve for the FY08 plan was $4.7 million.

A summary of activity under the FY11 and FY08 restructuring plans, all of which primarily relate to operating leases, including those classified as discontinued operations, is shown in the table below:

Restructuring reserve at December 31, 2011:
Recovery	$	1,596
Youth		8,287
Total restructuring reserve at December 31, 2011		9,883
Expenses:
Recovery		207
Youth		887
Total expenses		1,094
Cash payments:
Recovery		(347	)
Youth		(1,067	)
Total cash payment		(1,414	)
Restructuring reserve at September 30, 2012:
Recovery		1,456
Youth		8,107
Total restructuring reserve at September 30, 2012	$	9,563

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Document and Entity Information	9 Months Ended
	Sep. 30, 2012	Nov. 13, 2012
Entity Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2012
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q3
Entity Registrant Name	CRC Health CORP
Entity Central Index Key	0001360474
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		1,000

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DISCONTINUED OPERATIONS

9 Months Ended

Sep. 30, 2012

DISCONTINUED OPERATIONS

11. DISCONTINUED OPERATIONS

The results of operations for those facilities classified as discontinued operations are summarized below (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Net client service revenues	$	1,090		$	1,630		$	1,365		$	11,114
Operating expenses		1,621			8,371			4,092			22,765
Asset impairment		—			—			—			2,454
Interest expense		—			(1	)		(1	)		(3	)
Other income		—			10			—			10
Loss before income taxes		(531	)		(6,732	)		(2,728	)		(14,098	)
Income tax benefit		(200	)		(2,613	)		(1,028	)		(5,473	)
Loss from discontinued operations	$	(331	)	$	(4,119	)	$	(1,700	)	$	(8,625	)

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Net client service revenues	$ 119,730	$ 118,001	$ 343,984	$ 339,713
Operating expenses:
Salaries and benefits	53,357	51,822	162,093	154,937
Supplies, facilities and other operating costs	34,909	34,873	101,822	100,583
Provision for doubtful accounts	1,908	2,572	5,782	6,426
Depreciation and amortization	4,920	4,991	14,652	14,689
Goodwill and asset impairment	4,840		4,840	4,401
Total operating expenses	99,934	94,258	289,189	278,582
Operating income	19,796	23,743	54,795	61,131
Interest expense	(12,481)	(10,461)	(36,820)	(34,757)
Other income	269	216	763	621
Income from continuing operations before income taxes	7,584	13,498	18,738	26,995
Income tax expense	5,390	6,629	10,117	12,155
Income from continuing operations, net of tax	2,194	6,869	8,621	14,840
Loss from discontinued operations, net of tax	(331)	(4,119)	(1,700)	(8,625)
Net income	1,863	2,750	6,921	6,215
Net income (loss) attributable to noncontrolling interest	434		(500)
Net income attributable to CRC Health Corporation	2,297	2,750	6,421	6,215
Amounts attributable to CRC Health Corporation:
Income from continuing operations, net of tax	2,628	6,869	8,121	14,840
Discontinued operations, net of tax	(331)	(4,119)	(1,700)	(8,625)
Net income attributable to CRC Health Corporation	$ 2,297	$ 2,750	$ 6,421	$ 6,215

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FAIR VALUE MEASUREMENTS

9 Months Ended

Sep. 30, 2012

FAIR VALUE MEASUREMENTS

5. FAIR VALUE MEASUREMENTS

Assets and Liabilities Measured at Fair Value on a Recurring

As of September 30, 2012 and December 31, 2011, the Company did not have any assets or liabilities measured at fair value on a recurring basis.

Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

The Company’s goodwill and other indefinite-lived intangible assets are tested and reviewed annually for impairment during the fourth quarter or whenever there is a significant change in events or circumstances that indicate that the fair value of the asset may be less than the carrying amount of the asset. In addition, the Company’s property and equipment is assessed for recoverability of the carrying value whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.

The following table presents the non-financial assets that were measured and recorded at fair value during the three and nine month periods ending September 30, 2012 due to a change in circumstances and as a result recorded such assets at fair value as of September 30, 2012 (in thousands):

	Three and Nine Months Ended September 30, 2012
	Impairment Charge		Fair Value
Goodwill (see Note 2)	$	4,840	$	2,400

Fair Value of Financial Instruments

Financial instruments not measured at fair value on a recurring basis include cash, restricted cash, accounts receivable net, loan program notes receivable (net), accounts payable, term loans (net), and senior subordinated notes (net). With the exception of financial instruments noted in the following table, the fair value of the Company’s financial instruments approximate carrying value due to their short maturities.

The estimated fair value of financial instruments with long-term maturities is as follows:

	September 30, 2012				December 31, 2011
	(in thousands)
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Assets
Loan program notes receivable, net	$	11,785	$	9,731	$	10,541	$	8,195
Liabilities
Term loans, net	$	385,645	$	394,081	$	388,664	$	370,268
Senior subordinated notes, net	$	176,416	$	168,727	$	176,218	$	162,854

The estimated fair value for loan program notes is primarily based on securitization market conditions for similar loans. The Company’s term loans are measured at fair value based on present value methods using credit spreads derived from market data to discount the projected interest and principal payments. The Company’s senior subordinated notes are measured at fair value based on bond-yield data from market trading activity as well as U.S Treasury rates with similar maturities as the senior subordinated notes. As of September 30, 2012 and December 31, 2011, the estimated fair value of loan program notes, term loans and senior subordinated notes was determined based on Level 3 inputs.

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LONG-TERM DEBT

9 Months Ended

Sep. 30, 2012

LONG-TERM DEBT

4. LONG-TERM DEBT

Long-term debt at September 30, 2012 and December 31, 2011 consists of the following (in thousands):

	September 30, 2012			December 31, 2011
Term loans, net of discount of $2,982 in 2012	$	385,645		$	388,664
Revolving line of credit		27,000			36,500
Senior subordinated notes, net of discount of $880 in 2012 and $1,078 in 2011		176,416			176,218
Other		26			297
Total debt		589,087			601,679
Less: current portion of long-term debt		(145	)		(7,050	)
Total long-term debt	$	588,942		$	594,629

Term Loans and Revolving Line of Credit

Term Loans

On March 7, 2012, the aggregate principal amount of $80.9 million of Term Loans (the “Term Loans B-1”) was refinanced with cash proceeds (net of related fees and expenses) of an aggregate principal amount of $87.6 million of new Term Loans that mature on November 16, 2015 (the “Term Loans B-3”). New creditors and existing Term Loans B-1 creditors represented $67.0 million and $20.6 million of the Term Loans B-3 principal amount, respectively. Of the $20.6 million related to existing creditors, $6.1 million was contributed as additional Term Loan B-3 principal. As a part of the refinancing, the Company repaid $66.4 million of the aggregate principal Term Loans B-1. This repayment was recognized as an extinguishment of debt and $0.2 million of the remaining unamortized issuance costs related to Term Loans B-1 were charged to interest expense during the three months ended March 31, 2012. The Company recognized the refinancing of the remaining aggregate principal amount of $14.5 million with existing Term Loans B-1 creditors as a modification of debt. Refinancing costs of $0.5 million associated with the modified debt were charged to interest expense during the three months ended March 31, 2012. The remaining debt issuance costs of $2.2 million related to the refinancing were capitalized and are being amortized over the life of the Term Loans B-3 using the effective interest rate method. The Term Loans B-3 were issued with an original issue discount of 4.00% which is being amortized over the term of the Term Loans B-3 using the effective interest rate method.

At September 30, 2012, $83.1 million, net of discount of $3.0 million, are outstanding on the Term Loans B-3. Interest on these Term Loans B-3 is payable quarterly at: (i) for LIBOR loans for any interest period, a rate per annum equal to the LIBOR rate as determined by the administrative agent (but not less than 1.50%), plus an applicable margin of 7.00%, subject to an increase to 8.00% during any period that the Company’s public corporate family rating from Moody’s is not at least B3 or the Company’s public corporate credit rating from Standard & Poor’s Ratings Services (“S&P”) is not at least B-, and (ii) for base rate loans, a rate per annum equal to the greater of (x) the prime rate of the administrative agent and (y) the federal funds rate plus one-half of 1.00% (but, in either case, not less than 2.50%), plus an applicable margin of 6.00%, subject to an increase to 7.00% during any period that the Company’s public corporate family rating from Moody’s is not at least B3 or the Company’s public corporate rating credit rating from S&P is not at least B-. At September 30, 2012, the entire amount of these Term Loan B-3 consisted of LIBOR loans and the interest rate thereon was 8.5%.

The Term Loans B-3 are payable in quarterly principal installments of less than $0.1 million on September 30, 2013 and $0.2 million over the payment period between December 31, 2013 and September 30, 2015, with the remainder due on the maturity date of November 16, 2015.

Under the terms of this refinancing, the Company is required to pay (i) on March 31, 2013, a fee equal to 1.00% of the outstanding principal amount of such lender’s Term Loans B-3 as of such date, (ii) on March 31, 2014, a fee equal to 1.50% of the outstanding principal amount of such lender’s Term Loans B-3 as of such date and (iii) on the Maturity Date, a fee equal to 1.50% of the outstanding principal amount of such lender’s Term Loans B-3 as of such date. These fees are charged to interest expense over the term of the Term Loans B-3 using the effective interest rate method.

The Term Loans B-3 are subject to a 1.00% prepayment premium to the extent the Term Loans B-3 are refinanced, or the terms thereof are amended, in either case, for the purpose of reducing the applicable yield with respect thereto, in each case prior to the first anniversary of the refinancing.

At September 30, 2012, $302.5 million of the remaining Term Loans (the “Term Loans B-2”) are outstanding. The Term Loans B-2 mature on November 16, 2015. Interest on these Term Loans B-2 is payable quarterly at: (i) for LIBOR loans for any interest period, a rate per annum equal to the LIBOR rate as determined by the administrative agent, plus an applicable margin of 4.50% and (ii) for base rate loans, a rate per annum equal to the greater of (x) the prime rate of the administrative agent and (y) the federal funds rate plus one-half of 1.00%, plus an applicable margin of 3.50%. At September 30, 2012, the entire amount of these Term Loans B-2 consisted of LIBOR loans and the interest rate thereon was 4.86%.

The Term Loans B-2 are payable in quarterly principal installments of $0.1 million on September 30, 2013 and $0.8 million over the payment period between December 31, 2013 and September 30, 2015, with the remainder due on the maturity date of November 16, 2015.

The Company is required to apply a certain portion of its excess cash to the principal amount of the Term Loans on an annual basis. Excess cash under the Company’s Credit Agreement is defined as net income attributable to the Company adjusted for certain cash and non-cash items and is required to be calculated after the end of each year. Required payments, if any are due in March of the subsequent year. The Company made payments related to its excess cash in March of 2012, 2011 and 2010 of $6.8 million, $9.6 million and $7.3 million, respectively. No such similar amounts have been classified as a current liability as of September 30, 2012.

Revolving Line of Credit

On February 6, 2012, the Company repaid $13.5 million in revolving credit due to maturity of the commitment.

At September 30, 2012, the Company had aggregate revolving credit commitments of $63.0 million which mature on August 16, 2015. Interest is payable quarterly at (i) for LIBOR loans for any interest period, a rate per annum equal to the LIBOR rate as determined by the administrative agent, plus an applicable margin of 4.00%, 3.75%, 3.50% or 3.25%, based upon the Company’s leverage ratio being within certain defined ranges, and (ii) for base rate loans, a rate per annum equal to the greater of (x) the prime rate of the administrative agent and (y) the federal funds rate plus one-half of 1.00%, plus an applicable margin of 3.00%, 2.75%, 2.50% or 2.25%, based upon the Company’s leverage ratio being within certain defined ranges. Commitment fees are payable quarterly at a rate equal to 0.625% per annum. At September 30, 2012, the amount outstanding under the Company’s Revolving Line of Credit was $27.0 million and the interest rate thereon was 4.36%. At September 30, 2012, the Company’s letters of credit against the revolving commitments were $9.5 million.

The Company’s Term Loans and Revolving Line of Credit are guaranteed by the Company’s direct parent company, CRC Health Group, Inc. (“Holdings”) and substantially all of the Company’s current and future wholly-owned domestic subsidiaries, and are secured by substantially all of the Company’s, Holdings’ and the Company’s guarantor subsidiaries’ existing and future property and assets and by a pledge of the Company’s capital stock and the capital stock of the Company’s domestic wholly-owned subsidiaries and up to 65% of the capital stock of first-tier foreign subsidiaries. The Company’s Credit Agreement requires the Company to comply on a quarterly basis with certain financial and other covenants, including a maximum total leverage ratio test and an interest coverage ratio test. At September 30, 2012, the Company was in compliance with all the covenants.

Senior Subordinated Notes — At September 30, 2012, the outstanding aggregate principal amount related to the Company’s 10.75% Senior Subordinated Notes (the “Notes”) due February 1, 2016, was $176.4 million, net of discount of $0.9 million. Interest is payable semiannually. The Company may redeem some or all of the Notes at the redemption prices (expressed as percentages of principal amount of Notes to be redeemed) set forth below, plus accrued and unpaid interest thereon, if redeemed during the twelve-month period beginning on February 1 of each of the years indicated below:

Year	Percentage
2013		101.792	%
2014 and thereafter		100.000	%

If there is a change of control as specified in the indenture, the Company must offer to repurchase the Notes at 101% of their face amount, plus accrued and unpaid interest. The Notes are subordinated to all of the Company’s existing and future senior indebtedness, rank equally with all of the Company’s existing and future senior subordinated indebtedness and rank senior to all of the Company’s existing and future subordinated indebtedness. The Notes are guaranteed on an unsecured senior subordinated basis by each of the Company’s wholly owned subsidiaries that guarantee the Company’s Term Loans and Revolving Line of Credit. The Company’s Notes agreement requires it to comply on a quarterly basis with certain covenants. At September 30, 2012, the Company was in compliance with all the covenants.

Interest expense — The following table presents the components of interest expense (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Contractual interest on total debt	$	11,262		$	9,564		$	32,805		$	32,083
Amortization of debt discount and capitalized financing costs		1,355			1,009			4,369			3,005
Interest capitalized to property and equipment, net		(136	)		(112	)		(354	)		(331	)
Total interest expense	$	12,481		$	10,461		$	36,820		$	34,757

At September 30, 2012, currently scheduled principal payments of total debt, excluding the effects of the discounts on the term loans and the senior subordinated notes, are as follows (in thousands):

2012 (remaining 3 months)	$	26
2013		1,170
2014		4,193
2015		410,263
2016		177,296
Total	$	592,948

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GOODWILL AND INTANGIBLE ASSETS (Tables)

9 Months Ended

Sep. 30, 2012

Total Intangible Assets

Total intangible assets at September 30, 2012 and December 31, 2011 consist of the following (in thousands):

	September 30, 2012							December 31, 2011
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Intangible assets subject to amortization:
Referral network	$	17,177		(5,046	)	$	12,131	$	17,177	$	(4,402	)		12,775
Accreditations		7,142		(2,098	)		5,044		7,142		(1,831	)		5,311
Curriculum		4,650		(1,366	)		3,284		4,650		(1,191	)		3,459
Government contracts (including Medicaid)		34,967		(15,541	)		19,426		34,967		(13,793	)		21,174
Managed care contracts		14,500		(9,700	)		4,800		14,500		(8,605	)		5,895
Total intangible assets subject to amortization:	$	78,436	$	(33,751	)	$	44,685	$	78,436	$	(29,822	)	$	48,614
Intangible assets not subject to amortization:
Trademarks and trade names							170,632							170,632
Certificates of need							44,600							44,600
Regulatory licenses							37,501							37,501
Total intangible assets not subject to amortization							252,733							252,733
Total intangible assets						$	297,418						$	301,347

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SEGMENT INFORMATION

9 Months Ended

Sep. 30, 2012

SEGMENT INFORMATION

12. SEGMENT INFORMATION

Reportable segments are based upon the Company’s organizational structure, the manner in which the operations are managed and on the level at which the Company’s chief operating decision-maker allocates resources. The Company’s chief operating decision-maker is its Chief Executive Officer.

A summary of the Company’s reportable segments are as follows:

Recovery — The recovery segment specializes in the treatment of chemical dependency and other behavioral health disorders. Services offered in this segment include: inpatient/residential care, partial/day treatment, intensive outpatient groups, therapeutic living/half-way house environments, aftercare centers and detoxification. As of September 30, 2012, the recovery segment operates 29 inpatient, 16 outpatient facilities, and 57 comprehensive treatment centers (“CTCs”) in 21 states.

Youth — The youth segment provides a wide variety of adolescent therapeutic programs through settings and solutions that match individual needs with the appropriate learning and therapeutic environment. Services offered in this segment include boarding schools and experiential outdoor education programs. As of September 30, 2012, the youth segment operates 15 adolescent and young adult programs in 6 states.

Weight management — The weight management segment provides adult and adolescent treatment services for obesity and eating disorders, each a related behavioral disorder. Services offered in this segment include treatment plans through a combination of medical, psychological and social treatment programs. As of September 30, 2012, the weight management segment operates 21 facilities in 10 states, and one in the United Kingdom.

Corporate — In addition to the three reportable segments described above, the Company has activities classified as corporate which represent general and administrative expenses (management, financial, legal, human resources and information systems), and stock-based compensation expense that are not allocated to the segments.

Major Customers — No single customer represented 10% or more of the Company’s total net revenue in any period presented.

Geographic Information — The Company’s business operations are primarily in the United States.

Selected segment financial information for the Company’s reportable segments was as follows (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Net client service revenues:
Recovery	$	89,595		$	86,497		$	265,204		$	261,101
Youth		20,039			19,562			56,164			52,682
Weight management		10,082			11,909			22,560			25,818
Corporate		14			33			56			112
Total net client service revenues	$	119,730		$	118,001		$	343,984		$	339,713
Operating income (loss):
Recovery	$	30,128		$	26,065		$	82,888		$	84,978
Youth		960			1,891			1,158			(2,921	)
Weight management		(3,089	)		3,037			(3,076	)		3,853
Corporate		(8,203	)		(7,250	)		(26,175	)		(24,779	)
Operating income		19,796			23,743			54,795			61,131
Interest expense		(12,481	)		(10,461	)		(36,820	)		(34,757	)
Other income		269			216			763			621
Income from continuing operations before income taxes	$	7,584		$	13,498		$	18,738		$	26,995

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STOCKHOLDERS' EQUITY

9 Months Ended

Sep. 30, 2012

STOCKHOLDERS' EQUITY

8. STOCKHOLDERS’ EQUITY

Capital Contributed by Parent

Contributions from and distributions to the Parent are reflected as changes to additional paid-in capital on the condensed consolidated balance sheets. During the nine months ended September 30, 2012, the Company recorded a capital distribution to the Parent of $9.5 million for payment of its debt obligations.

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CONDENSED CONSOLIDATING FINANCIAL INFORMATION - (Condensed Consolidating Statements Of Operations) (Detail) (USD $)	3 Months Ended			6 Months Ended	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Mar. 31, 2011	Jun. 30, 2012	Sep. 30, 2012	Sep. 30, 2011
Net revenues:
Net client service revenues	$ 119,730,000	$ 118,001,000			$ 343,984,000	$ 339,713,000
Total net revenues	119,730,000	118,001,000			343,984,000	339,713,000
Operating expenses:
Salaries and benefits	53,357,000	51,822,000			162,093,000	154,937,000
Supplies, facilities and other operating costs	34,909,000	34,873,000			101,822,000	100,583,000
Provision for doubtful accounts	1,908,000	2,572,000			5,782,000	6,426,000
Depreciation and amortization	4,920,000	4,991,000			14,652,000	14,689,000
Goodwill impairment	4,840,000	4,840,000			4,840,000	4,800
Asset impairment			1,900,000			1,947,000
Total operating expenses	99,934,000	94,258,000			289,189,000	278,582,000
Operating income	19,796,000	23,743,000			54,795,000	61,131,000
Interest expense	(12,481,000)	(10,461,000)			(36,820,000)	(34,757,000)
Other income	269,000	216,000			763,000	621,000
Income from continuing operations before income taxes	7,584,000	13,498,000			18,738,000	26,995,000
Income tax expense	5,390,000	6,629,000			10,117,000	12,155,000
Income from continuing operations, net of tax	2,194,000	6,869,000			8,621,000	14,840,000
Loss from discontinued operations, net of tax	(331,000)	(4,119,000)			(1,700,000)	(8,625,000)
Net income	1,863,000	2,750,000			6,921,000	6,215,000
Net income attributable to noncontrolling interest	434,000			(900,000)	(500,000)
Net income attributable to CRC Health Corporation	2,297,000	2,750,000			6,421,000	6,215,000
CRC Health Corporation [Member]
Net revenues:
Net client service revenues	14,000	33,000			57,000	136,000
Management fee revenues	20,672,000	17,615,000			62,958,000	59,738,000
Total net revenues	20,686,000	17,648,000			63,015,000	59,874,000
Operating expenses:
Salaries and benefits	6,420,000	3,881,000			20,185,000	12,787,000
Supplies, facilities and other operating costs	691,000	2,148,000			2,765,000	6,229,000
Depreciation and amortization	1,107,000	1,184,000			3,282,000	3,303,000
Total operating expenses	8,218,000	7,213,000			26,232,000	22,319,000
Operating income	12,468,000	10,435,000			36,783,000	37,555,000
Interest expense	(12,474,000)	(10,439,000)			(36,789,000)	(34,574,000)
Other income	267,000	210,000			754,000	606,000
Income from continuing operations before income taxes	261,000	206,000			748,000	3,587,000
Income tax expense	185,000	101,000			404,000	1,615,000
Equity in income of subsidiaries, net of tax	2,221,000	2,645,000			6,077,000	4,243,000
Income from continuing operations, net of tax	2,297,000	2,750,000			6,421,000	6,215,000
Net income	2,297,000	2,750,000			6,421,000	6,215,000
Net income attributable to CRC Health Corporation	2,297,000				6,421,000
Subsidiary Guarantors [Member]
Net revenues:
Net client service revenues	119,716,000	117,968,000			343,927,000	339,577,000
Total net revenues	119,716,000	117,968,000			343,927,000	339,577,000
Operating expenses:
Salaries and benefits	46,937,000	47,941,000			141,908,000	142,150,000
Supplies, facilities and other operating costs	34,218,000	32,725,000			99,057,000	94,354,000
Provision for doubtful accounts	1,908,000	2,572,000			5,782,000	6,426,000
Depreciation and amortization	3,813,000	3,807,000			11,370,000	11,386,000
Goodwill impairment	4,840,000				4,840,000
Asset impairment						1,947,000
Management fee expense	20,672,000	17,615,000			62,958,000	59,738,000
Total operating expenses	112,388,000	104,660,000			325,915,000	316,001,000
Operating income	7,328,000	13,308,000			18,012,000	23,576,000
Interest expense	(7,000)	(22,000)			(31,000)	(183,000)
Other income	2,000	6,000			9,000	15,000
Income from continuing operations before income taxes	7,323,000	13,292,000			17,990,000	23,408,000
Income tax expense	5,205,000	6,528,000			9,713,000	10,540,000
Income from continuing operations, net of tax	2,118,000	6,764,000			8,277,000	12,868,000
Loss from discontinued operations, net of tax	(331,000)	(4,119,000)			(1,700,000)	(8,625,000)
Net income	1,787,000	2,645,000			6,577,000	4,243,000
Net income attributable to noncontrolling interest	434,000				(500,000)
Net income attributable to CRC Health Corporation	2,221,000				6,077,000
Eliminations [Member]
Net revenues:
Management fee revenues	(20,672,000)	(17,615,000)			(62,958,000)	(59,738,000)
Total net revenues	(20,672,000)	(17,615,000)			(62,958,000)	(59,738,000)
Operating expenses:
Management fee expense	(20,672,000)	(17,615,000)			(62,958,000)	(59,738,000)
Total operating expenses	(20,672,000)	(17,615,000)			(62,958,000)	(59,738,000)
Equity in income of subsidiaries, net of tax	(2,221,000)	(2,645,000)			(6,077,000)	(4,243,000)
Income from continuing operations, net of tax	(2,221,000)	(2,645,000)			(6,077,000)	(4,243,000)
Net income	(2,221,000)	(2,645,000)			(6,077,000)	(4,243,000)
Net income attributable to CRC Health Corporation	$ (2,221,000)				$ (6,077,000)

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COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2012

COMMITMENTS AND CONTINGENCIES

6. COMMITMENTS AND CONTINGENCIES

Litigation — In a complaint initially filed on July 6, 2011, and amended on August 25, 2011, in Multnomah County Circuit Court in Oregon, 17 former students of one of our previously closed therapeutic boarding school facilities (Mount Bachelor Academy) allege mental and physical abuse by certain former employees or agents of the school. The Company and CRC Health Oregon, Inc. are among the defendants in the pending litigation. The plaintiffs seek a total of $26.0 million in relief. A second suit was filed in November 2011in Multnomah County Circuit Court in Oregon by 14 former students also alleging abuse. The plaintiffs seek a total of $23.0 million in relief in the second suit. The Company and the other defendants intend to defend vigorously the pending lawsuits. In consultation with counsel and based on its preliminary investigation into the facts alleged, the Company believe these cases are without merit. However, at this time, the Company is unable to predict the outcome of the lawsuit, the possible loss or range of loss, if any, after consideration of the extent of insurance coverage associated with the resolution of the lawsuit or any potential effect it may have on the Company or its operations. On May 10, 2012, Nautilus Insurance Corporation, filed a complaint against CRC Health Group, Inc. and certain related entities seeking declaratory relief in the federal district court in Portland, Oregon. The Complaint seeks a judicial determination as to whether the Nautilus general and healthcare professional liability insurance policies provide coverage for these suits against Mount Bachelor Academy and asks the court to enter judgment that the policies are null and void, or alternatively that the policies do not cover these specific lawsuits, and to declare that Nautilus has no duty to defend or indemnify Mount Bachelor Academy, Aspen or CRC. In consultation with counsel and based on our preliminary review of the matters alleged, the Company believes this suit is without merit and is vigorously defending the matter.

In 2011, two actions were brought against the Company’s New Life Lodge facility. One suit alleges negligence and medical malpractice resulting in wrongful death and seeks a total $32.0 million in compensatory and punitive damages. The second suit is a medical malpractice action for alleged wrongful death and sought $13.0 million in compensatory and punitive damages. This suit was dismissed without prejudice in October 2012. Plaintiff’s counsel may refile the suit within one year of the dismissal and has indicated that he intends to do such. The Company intends to defend vigorously these lawsuits. In consultation with counsel and based on its preliminary investigation into the facts alleged, the Company believes these cases are without merit. However, at this time, the Company is unable to predict the outcome of the lawsuit or the possible loss or range of loss, if any, after consideration of the extent of insurance coverage associated with the resolution of the lawsuit or any potential effect it may have on the Company or its operations.

The Company is involved in litigation and regulatory investigations arising in the course of business. After consultation with legal counsel, management estimates that these matters will be resolved without material adverse effect on the Company’s future financial position or results from operations and cash flows.

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REDEEMABLE NONCONTROLLING INTEREST

9 Months Ended

Sep. 30, 2012

REDEEMABLE NONCONTROLLING INTEREST

7. REDEEMABLE NONCONTROLLING INTEREST

The Company owned a seventy-five percent interest in an entity. The noncontrolling interest holder had the unilateral right to require the Company to redeem the noncontrolling interest at a price to be calculated pursuant to the terms and conditions of the operating agreement. In July 2012, the Company redeemed the noncontrolling interest for $0.5 million. The Company previously recorded the estimated redemption amount of $0.9 million as a “net loss attributable to noncontrolling interest,” in the condensed consolidated statements of operations for the six months ended June 30, 2012. The gain of $0.4 million is recorded as “net income attributable to noncontrolling interest” for the three months ended September 30, 2012.

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STOCK-BASED COMPENSATION

9 Months Ended

Sep. 30, 2012

STOCK-BASED COMPENSATION

9. STOCK-BASED COMPENSATION

The Company incurs stock-based compensation expense related to the equity awards made by the Group to employees of the Company. The total stock-based compensation expense was $0.7 million for both the three months ended September 30, 2012 and 2011, and $1.7 million and $2.1 million for the nine months ended September 30, 2012 and 2011, respectively. Stock-based compensation expense is recorded within salaries and benefits on the condensed consolidated statements of operations. The total income tax benefit recognized in the condensed consolidated statement of operations for stock-based compensation expense was $0.3 million for both the three months ended September 30, 2012 and 2011, and $0.7 million and $0.8 million, for the nine months ended September 30, 2012 and 2011, respectively.

During the nine months ended September 30, 2012, the Group granted 44,300 units, which represent 398,700 and 44,300 share options to purchase Class A and Class L common stock of the Group, respectively. At September 30, 2012 and December 31, 2011, the Company had 3,531,200 and 3,736,359 unvested option shares with per-share, weighted average grant date fair values of $3.38 and $3.32, respectively. Additionally, 420,968 option shares with a per-share weighted average grant date fair value of $3.34 vested during the nine months ended September 30, 2012.

Activity under the Group’s plans for the nine months ended September 30, 2012 is summarized below:

	Option Shares			Weighted- Average Exercise Price Per Share		Weighted- Average Grant Date Fair Value		Weighted- Average Remaining Contractual Term (In Years)
Balance at December 31, 2011		6,764,840		$	7.31				6.25
Granted		443,000		$	7.57	$	4.16		9.54
Exercised		(6,424	)
Forfeited/cancelled/expired		(473,192	)	$	8.30	$	4.27
Outstanding-September 30, 2012		6,728,224		$	7.27				5.79
Exercisable-September 30, 2012		3,197,024		$	6.58				4.10
Exercisable and expected to be exercisable		6,391,813		$	7.27				5.79

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CONDENSED CONSOLIDATING FINANCIAL INFORMATION - (Condensed Consolidating Statements Of Cash Flows) (Detail) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Cash flows from operating activities:
Net cash provided by operating activities	$ 43,088	$ 34,796
Cash flows from investing activities:
Additions of property and equipment	(11,328)	(13,004)
Proceeds from the sale of property and equipment	691	152
Acquisition of non-controlling interest	(500)
Other investing activities	(101)	(91)
Net cash used in investing activities	(11,238)	(12,943)
Cash flows from financing activities:
Borrowings of long-term debt	84,096
Repayment of long-term debt	(88,118)	(12,609)
Borrowings on revolving line of credit	18,000	9,500
Repayments on revolving line of credit	(27,500)	(7,000)
Capital distributed to Parent	(9,554)	(3,169)
Capitalized financing costs	(2,786)	(1,616)
Net cash used in financing activities	(25,862)	(14,894)
Net increase in cash and cash equivalents	5,988	6,959
Cash and cash equivalents - beginning of period	10,183	7,111
Cash and cash equivalents - end of period	16,171	14,070
CRC Health Corporation [Member]
Cash flows from operating activities:
Net cash provided by operating activities	18,658	11,038
Cash flows from investing activities:
Additions of property and equipment	(2,848)	(4,432)
Other investing activities	(101)	(91)
Net cash used in investing activities	(2,949)	(4,523)
Cash flows from financing activities:
Intercompany transfers	9,673	5,467
Borrowings of long-term debt	84,096
Repayment of long-term debt	(87,638)	(9,697)
Borrowings on revolving line of credit	18,000	9,500
Repayments on revolving line of credit	(27,500)	(7,000)
Capital distributed to Parent	(9,554)	(3,169)
Capitalized financing costs	(2,786)	(1,616)
Net cash used in financing activities	(15,709)	(6,515)
Subsidiary Guarantors [Member]
Cash flows from operating activities:
Net cash provided by operating activities	24,430	23,758
Cash flows from investing activities:
Additions of property and equipment	(8,480)	(8,572)
Proceeds from the sale of property and equipment	691	152
Acquisition of non-controlling interest	(500)
Net cash used in investing activities	(8,289)	(8,420)
Cash flows from financing activities:
Intercompany transfers	(9,673)	(5,467)
Repayment of long-term debt	(480)	(2,912)
Net cash used in financing activities	(10,153)	(8,379)
Net increase in cash and cash equivalents	5,988	6,959
Cash and cash equivalents - beginning of period	10,183	7,111
Cash and cash equivalents - end of period	$ 16,171	$ 14,070

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GOODWILL AND INTANGIBLE ASSETS - (Narrative) (Detail) (USD $)	3 Months Ended			9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Mar. 31, 2011	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
Indefinite And Finite Lived Intangible Assets [Line Items]
Goodwill non-cash impairment charge	$ 4,840,000	$ 4,840,000		$ 4,840,000	$ 4,800
Goodwill	518,952,000			518,952,000		523,792,000
Amortization expense for intangible assets subject to amortization	1,300,000	1,400,000		3,900,000	4,100,000
Non-cash impairment charge			1,900,000		1,947,000
Non cash impairment charges of intangible assets of discontinued operations			2,100,000
Weight Management [Member]
Indefinite And Finite Lived Intangible Assets [Line Items]
Goodwill	$ 2,400,000			$ 2,400,000

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STOCK-BASED COMPENSATION - (Narrative) (Detail) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 700,000	$ 700,000	$ 1,727,000	$ 2,060,000
Income tax benefit for stock-based compensation expense	$ 300,000	$ 300,000	$ 700,000	$ 800,000
Granted units			443,300
Unvested option shares	3,531,200		3,531,200		3,736,359
Weighted average grant date fair values	$ 3.38		$ 3.38		$ 3.32
Vested option shares			420,968
Vested option shares weighted average grant date fair value			$ 3.34
Class A Common Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted units			398,700
Class L Common Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted units			44,300

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OVERVIEW AND BASIS OF PRESENTATION (Policies)

9 Months Ended

Sep. 30, 2012

Basis of Presentation

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X, without audit. Accordingly, they do not include all of the information required by accounting principles generally accepted in the United States of America for annual financial statements. The unaudited condensed consolidated balance sheet as of December 31, 2011 has been derived from our audited financial statements.

In the opinion of management, these unaudited condensed consolidated financial statements contain all adjustments, consisting of normal recurring adjustments, necessary to present fairly the financial position of the Company, its results of operations, and its cash flows. These unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and the notes thereto for the year ended December 31, 2011.

Principles of Consolidation

Principles of Consolidation — The Company’s condensed consolidated financial statements include the accounts of CRC Health Corporation and its consolidated subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

Use of Estimates — Preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the Company’s condensed consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates.

Reclassifications: Discontinued Operations

Reclassifications: Discontinued Operations — The condensed consolidated statements of operations have been reclassified for all periods presented to reflect the presentation of closed or sold facilities as discontinued operations (see Note 11). Unless noted otherwise, discussions in the notes to the condensed consolidated financial statements pertain to continuing operations.

Recently Adopted Accounting Guidance

Recently Adopted Pronouncements — The Financial Accounting Standards Board (“FASB”) Accounting Standards Update issued (“ASU”) No. 2012-02, Intangibles—Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment, permits an entity to assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative impairment test. If the entity determines that it is not more likely than not that the asset is impaired, it would have the option to forgo the annual calculation of the fair value of an indefinite-lived intangible asset. The updated guidance will be effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. The adoption of the new guidance will not have a material impact on the Company’s condensed consolidated financial statements.

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FAIR VALUE MEASUREMENTS (Tables)

9 Months Ended

Sep. 30, 2012

Non-Financial Assets Measured and Recorded At Fair Value

The following table presents the non-financial assets that were measured and recorded at fair value during the three and nine month periods ending September 30, 2012 due to a change in circumstances and as a result recorded such assets at fair value as of September 30, 2012 (in thousands):

	Three and Nine Months Ended September 30, 2012
	Impairment Charge		Fair Value
Goodwill (see Note 2)	$	4,840	$	2,400

Estimated Fair Value Of Financial Instruments With Long-Term Maturities

The estimated fair value of financial instruments with long-term maturities is as follows:

	September 30, 2012				December 31, 2011
	(in thousands)
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Assets
Loan program notes receivable, net	$	11,785	$	9,731	$	10,541	$	8,195
Liabilities
Term loans, net	$	385,645	$	394,081	$	388,664	$	370,268
Senior subordinated notes, net	$	176,416	$	168,727	$	176,218	$	162,854

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REDEEMABLE NONCONTROLLING INTEREST - (Narrative) (Detail) (USD $) In Thousands, unless otherwise specified	1 Months Ended	3 Months Ended	6 Months Ended	9 Months Ended
	Jul. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Sep. 30, 2012
Noncontrolling Interest [Line Items]
Net loss attributable to noncontrolling interest		$ (434)	$ 900	$ 500
Acquisition of non-controlling interest	$ 500			$ 500

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LONG-TERM DEBT - (Revolving Line Of Credit Narrative) (Detail) (USD $)			1 Months Ended	9 Months Ended
	Sep. 30, 2012	Dec. 31, 2011	Feb. 06, 2012 Revolving Line Of Credit [Member]	Sep. 30, 2012 Revolving Line Of Credit [Member]	Sep. 30, 2012 Revolving Line Of Credit [Member] Letter of Credit [Member]	Sep. 30, 2012 Revolving Line Of Credit [Member] Line of Credit Facility Commitment Amount [Member]
Debt Instrument [Line Items]
Repayment of revolving credit			$ 13,500,000
Debt instrument, maturity date				Aug. 16, 2015
Debt Instrument Description Of Variable Rate Basis				(i) for LIBOR loans for any interest period, a rate per annum equal to the LIBOR rate as determined by the administrative agent, plus an applicable margin of 4.00%, 3.75%, 3.50% or 3.25%, based upon the Company's leverage ratio being within certain defined ranges, and (ii) for base rate loans, a rate per annum equal to the greater of (x) the prime rate of the administrative agent and (y) the federal funds rate plus one-half of 1.00%, plus an applicable margin of 3.00%, 2.75%, 2.50% or 2.25%, based upon the Company's leverage ratio being within certain defined ranges.
Commitment fees rate				0.625%
Line of credit	27,000,000	36,500,000		27,000,000	9,500,000
Revolving credit Interest rate				4.36%
Revolving credit commitments						$ 63,000,000
Percentage of capital stock of first-tier foreign subsidiaries	65.00%

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Net income	$ 1,863	$ 2,750	$ 6,921	$ 6,215
Net change in unrealized gain on cash flow hedges (net of tax of $1,391)				2,106
Total comprehensive income	1,863	2,750	6,921	8,321
Less: Comprehensive income (loss) attributable to noncontrolling interest	434		(500)
Comprehensive income attributable to CRC Health Corporation	$ 2,297	$ 2,750	$ 6,421	$ 8,321

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INCOME TAXES

9 Months Ended

Sep. 30, 2012

INCOME TAXES

3. INCOME TAXES

The Company calculates its income tax expense for interim periods by applying the full year’s estimated effective tax rate in its financial statements for interim periods (in thousands, except percentages).

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Income tax expense from continuing operations	$	5,390		$	6,629		$	10,117		$	12,155
Effective tax rate		71.1	%		49.1	%		54.0	%		45.0	%

The Company’s effective tax rate of 71.1% for the three months ended September 30, 2012 differed from the effective tax rate for the three months ended September 30, 2011 of 49.1%, as well as the tax computed at the U.S. federal statutory income tax rate of 35%, due primarily to the non-deductible non-cash impairment charge to goodwill of $4.8 million.

The Company’s effective tax rate of 54.0% for the nine months ended September 30, 2012 differed from the effective tax rate for the nine months ended September 30, 2011 of 45.0%, as well as the tax computed at the U.S. federal statutory income tax rate of 35%, due primarily to the non-deductible non-cash impairment charge to goodwill of $4.8 million.

The Company records liabilities related to uncertain tax positions in accordance with authoritative guidance on accounting for uncertainty in income taxes. As of September 30, 2012 and December 31, 2011, the Company’s cumulative unrecognized tax benefits were $1.5 million and $0.9 million. Included in the balance of unrecognized tax benefits at September 30, 2012 and December 31, 2011 was $1.5 million and $0.9 million, that, if recognized, would affect the effective tax rate.

The Company recognizes interest and penalties related to unrecognized tax positions as part of our provision for federal and state and income taxes. We accrued $0.1 million for the payment of interest and penalties as of September 30, 2012. The Company did not accrue interest and penalties related to unrecognized tax positions prior to 2012.

The Company files income tax returns in the United States federal, various states, and foreign tax jurisdictions in which we have subsidiaries. During the year, the IRS commenced examinations of certain of our U.S. federal income tax returns for years including 2009 and 2010. We do not expect that the results of these examinations will have a material effect on our financial condition or results of operations. The statute of limitations remains open for 2007 through 2012 in the U.S. federal and for 2006 through 2012 in state jurisdictions. Years outside the normal statute of limitation remain open to audit by tax authorities due to tax attributes generated in those earlier years that have been carried forward and may be audited in subsequent years when utilized.

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CONDENSED CONSOLIDATING FINANCIAL INFORMATION - (Narrative) (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Condensed Consolidating Financial Information [Line Items]
Aggregate principal amount outstanding	$ 176,416	$ 176,218
Ownership Percentage	100.00%

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STOCK-BASED COMPENSATION (Tables)

9 Months Ended

Sep. 30, 2012

STOCK-BASED COMPENSATION

Activity under the Group’s plans for the nine months ended September 30, 2012 is summarized below:

	Option Shares			Weighted- Average Exercise Price Per Share		Weighted- Average Grant Date Fair Value		Weighted- Average Remaining Contractual Term (In Years)
Balance at December 31, 2011		6,764,840		$	7.31				6.25
Granted		443,000		$	7.57	$	4.16		9.54
Exercised		(6,424	)
Forfeited/cancelled/expired		(473,192	)	$	8.30	$	4.27
Outstanding-September 30, 2012		6,728,224		$	7.27				5.79
Exercisable-September 30, 2012		3,197,024		$	6.58				4.10
Exercisable and expected to be exercisable		6,391,813		$	7.27				5.79

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LONG-TERM DEBT - (Schedule Of Long Term Debt) (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Debt Instrument [Line Items]
Term loans, net of discount of $2,982 in 2012	$ 385,645	$ 388,664
Revolving line of credit	27,000	36,500
Senior subordinated notes, net of discount of $880 in 2012 and $1,078 in 2011	176,416	176,218
Other	26	297
Total debt	589,087	601,679
Less: current portion of long-term debt	(145)	(7,050)
Total long-term debt	$ 588,942	$ 594,629

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CONDENSED CONSOLIDATING FINANCIAL INFORMATION

9 Months Ended

Sep. 30, 2012

CONDENSED CONSOLIDATING FINANCIAL INFORMATION

13. CONDENSED CONSOLIDATING FINANCIAL INFORMATION

As of September 30, 2012, the Company had $176.4 million aggregate principal amount of the Notes outstanding. The Notes are fully and unconditionally guaranteed, jointly and severally on an unsecured senior subordinated basis, by the Company’s 100% owned subsidiaries.

The following supplemental tables present condensed consolidating balance sheets for the Company and its subsidiary guarantors as of September 30, 2012 and December 31, 2011, the condensed consolidating statements of operations for the three and nine months ended September 30, 2012 and 2011, the condensed consolidated statements of comprehensive income for the nine months ended September 30, 2011 (total comprehensive income was the same as net income for the three months ended September 30, 2011, and the three and nine months ended September 30, 2012), and the condensed consolidating statements of cash flows for the nine months ended September 30, 2012 and 2011. As a result of the Company’s redemption of the noncontrolling interest in a subsidiary non-guarantor (see Note 7), the condensed consolidating financial information have been reclassified for all periods presented to reflect the presentation of all subsidiaries as Subsidiary Guarantors.

Condensed Consolidating Balance Sheet as of September 30, 2012

(In thousands) (Unaudited)

	CRC Health Corporation		Subsidiary Guarantors		Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	—	$	16,171	$	—			16,171
Restricted cash		315		—		—			315
Accounts receivable, net		—		37,423		—			37,423
Prepaid expenses		2,788		3,154		—			5,942
Other current assets		526		1,385		—			1,911
Deferred income taxes		6,365		—		—			6,365
Current assets of discontinued operations		—		352		—			352
Total current assets		9,994		58,485		—			68,479
Property and equipment, net		8,660		118,586		—			127,246
Goodwill		—		518,952		—			518,952
Other intangible assets, net		—		297,418		—			297,418
Other assets, net		20,975		502		—			21,477
Investment in subsidiaries		948,650		—		(948,650	)		—
Total assets	$	988,279	$	993,943	$	(948,650	)	$	1,033,572
Liabilities and equity
Current liabilities:
Accounts payable	$	4,852	$	1,126	$	—		$	5,978
Accrued liabilities		16,620		15,805		—			32,425
Income taxes payable		8,350		—		—			8,350
Current portion of long-term debt		119		26		—			145
Other current liabilities		1,006		12,080		—			13,086
Current liabilities of discontinued operations		—		2,668		—			2,668
Total current liabilities		30,947		31,705		—			62,652
Long-term debt		588,942		—		—			588,942
Other long-term liabilities		1,593		7,100		—			8,693
Long-term liabilities of discontinued operations		—		6,488		—			6,488
Deferred income taxes		103,249		—		—			103,249
Total liabilities		724,731		45,293		—			770,024
Total equity		263,548		948,650		(948,650	)		263,548
Total liabilities and equity	$	988,279	$	993,943	$	(948,650	)	$	1,033,572

Condensed Consolidating Balance Sheet as of December 31, 2011

(In thousands) (Unaudited)

	CRC Health Corporation		Subsidiary Guarantors		Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	—	$	10,183	$	—		$	10,183
Restricted cash		328		—		—			328
Accounts receivable, net		—		36,196		—			36,196
Prepaid expenses		5,179		3,193		—			8,372
Other current assets		571		2,067		—			2,638
Income taxes receivable		516		—		—			516
Deferred income taxes		6,365		—		—			6,365
Current assets of discontinued operations		—		1,261		—			1,261
Total current assets		12,959		52,900		—			65,859
Property and equipment, net		9,993		116,847		—			126,840
Goodwill		—		523,792		—			523,792
Other intangible assets, net		—		301,347		—			301,347
Other assets, net		20,635		484		—			21,119
Investment in subsidiaries		951,669		—		(951,669	)		—
Total assets	$	995,256	$	995,370	$	(951,669	)	$	1,038,957
Liabilities and equity
Current liabilities:
Accounts payable	$	3,670	$	1,324	$	—		$	4,994
Accrued liabilities		18,414		13,625		—			32,039
Current portion of long-term debt		6,771		279		—			7,050
Other current liabilities		863		11,749		—			12,612
Current liabilities of discontinued operations		—		2,511		—			2,511
Total current liabilities		29,718		29,488		—			59,206
Long-term debt		594,629		—		—			594,629
Other long-term liabilities		915		7,416		—			8,331
Long-term liabilities of discontinued operations		—		6,797		—			6,797
Deferred income taxes		105,040		—		—			105,040
Total liabilities		730,302		43,701		—			774,003
Total equity		264,954		951,669		(951,669	)		264,954
Total liabilities and equity	$	995,256	$	995,370	$	(951,669	)	$	1,038,957

Condensed Consolidating Statements of Operations

For the Three Months Ended September 30, 2012

(In thousands) (Unaudited)

	CRC Health Corporation			Subsidiary Guarantors			Eliminations			Consolidated
Net revenues:
Net client service revenues	$	14		$	119,716		$	—		$	119,730
Management fee revenues		20,672			—			(20,672	)		—
Total net revenues		20,686			119,716			(20,672	)		119,730
Operating expenses:
Salaries and benefits		6,420			46,937			—			53,357
Supplies, facilities and other operating costs		691			34,218			—			34,909
Provision for doubtful accounts		—			1,908			—			1,908
Depreciation and amortization		1,107			3,813			—			4,920
Goodwill impairment		—			4,840			—			4,840
Management fee expense		—			20,672			(20,672	)		—
Total operating expenses		8,218			112,388			(20,672	)		99,934
Operating income		12,468			7,328			—			19,796
Interest expense		(12,474	)		(7	)		—			(12,481	)
Other income		267			2			—			269
Income from continuing operations before income taxes		261			7,323			—			7,584
Income tax expense		185			5,205			—			5,390
Equity in income of subsidiaries, net of tax		2,221			—			(2,221	)		—
Income from continuing operations		2,297			2,118			(2,221	)		2,194
Loss from discontinued operations, net of tax		—			(331	)		—			(331	)
Net income		2,297			1,787			(2,221	)		1,863
Net income attributable to noncontrolling interest		—			434			—			434
Net income attributable to CRC Health Corporation	$	2,297		$	2,221		$	(2,221	)	$	2,297

Condensed Consolidating Statements of Operations

For the Three Months Ended September 30, 2011

(In thousands) (Unaudited)

	CRC Health Corporation			Subsidiary Guarantors			Eliminations			Consolidated
Net revenues:
Net client service revenues	$	33		$	117,968		$	—		$	118,001
Management fee revenues		17,615			—			(17,615	)		—
Total net revenues		17,648			117,968			(17,615	)		118,001
Operating expenses:
Salaries and benefits		3,881			47,941			—			51,822
Supplies, facilities and other operating costs		2,148			32,725			—			34,873
Provision for doubtful accounts		—			2,572			—			2,572
Depreciation and amortization		1,184			3,807			—			4,991
Management fee expense		—			17,615			(17,615	)		—
Total operating expenses		7,213			104,660			(17,615	)		94,258
Operating income		10,435			13,308			—			23,743
Interest expense		(10,439	)		(22	)		—			(10,461	)
Other income		210			6			—			216
Income from continuing operations before income taxes		206			13,292			—			13,498
Income tax expense		101			6,528			—			6,629
Equity in income of subsidiaries, net of tax		2,645			—			(2,645	)		—
Income from continuing operations		2,750			6,764			(2,645	)		6,869
Loss from discontinued operations, net of tax		—			(4,119	)		—			(4,119	)
Net income	$	2,750		$	2,645		$	(2,645	)	$	2,750

Condensed Consolidating Statements of Operations

For the Nine Months Ended September 30, 2012

(In thousands) (Unaudited)

	CRC Health Corporation			Subsidiary Guarantors			Eliminations			Consolidated
Net revenues:
Net client service revenues	$	57		$	343,927		$	—		$	343,984
Management fee revenues		62,958			—			(62,958	)		—
Total net revenues		63,015			343,927			(62,958	)		343,984
Operating expenses:
Salaries and benefits		20,185			141,908			—			162,093
Supplies, facilities and other operating costs		2,765			99,057			—			101,822
Provision for doubtful accounts		—			5,782			—			5,782
Depreciation and amortization		3,282			11,370			—			14,652
Goodwill impairment		—			4,840			—			4,840
Management fee expense		—			62,958			(62,958	)		—
Total operating expenses		26,232			325,915			(62,958	)		289,189
Operating income		36,783			18,012			—			54,795
Interest expense		(36,789	)		(31	)		—			(36,820	)
Other income		754			9			—			763
Income from continuing operations before income taxes		748			17,990			—			18,738
Income tax expense (benefit)		404			9,713			—			10,117
Equity in income of subsidiaries, net of tax		6,077			—			(6,077	)		—
Income from continuing operations		6,421			8,277			(6,077	)		8,621
Loss from discontinued operations, net of tax		—			(1,700	)		—			(1,700	)
Net income		6,421			6,577			(6,077	)		6,921
Net loss attributable to noncontrolling interest		—			(500	)		—			(500	)
Net income attributable to CRC Health Corporation	$	6,421		$	6,077		$	(6,077	)	$	6,421

Condensed Consolidating Statements of Operations

For the Nine Months Ended September 30, 2011

(In thousands) (Unaudited)

	CRC Health Corporation			Subsidiary Guarantors			Eliminations			Consolidated
Net revenues:
Net client service revenues	$	136		$	339,577		$	—		$	339,713
Management fee revenues		59,738			—			(59,738	)		—
Total net revenues		59,874			339,577			(59,738	)		339,713
Operating expenses:
Salaries and benefits		12,787			142,150			—			154,937
Supplies, facilities and other operating costs		6,229			94,354			—			100,583
Provision for doubtful accounts		—			6,426			—			6,426
Depreciation and amortization		3,303			11,386			—			14,689
Asset impairment		—			1,947			—			1,947
Management fee expense		—			59,738			(59,738	)		—
Total operating expenses		22,319			316,001			(59,738	)		278,582
Operating income (loss)		37,555			23,576			—			61,131
Interest expense		(34,574	)		(183	)		—			(34,757	)
Other income		606			15			—			621
Income from continuing operations before income taxes		3,587			23,408			—			26,995
Income tax expense		1,615			10,540			—			12,155
Equity in income of subsidiaries, net of tax		4,243			—			(4,243	)		—
Income from continuing operations		6,215			12,868			(4,243	)		14,840
Loss from discontinued operations, net of tax		—			(8,625	)		—			(8,625	)
Net income	$	6,215		$	4,243		$	(4,243	)	$	6,215

Condensed Consolidating Statements of Comprehensive Income

For the Nine Months Ended September 30, 2011

(In thousands) (Unaudited)

	CRC Health Corporation		Subsidiary Guarantors		Eliminations			Consolidated
Net income (loss)	$	6,215	$	4,243	$	(4,243	)	$	6,215
Other comprehensive income:
Net change in unrealized gain on cash flow hedges (net of tax of $1,391)		2,106		—		—			2,106
Total comprehensive income (loss)	$	8,321	$	4,243	$	(4,243	)	$	8,321

Condensed Consolidating Statements of Cash Flows

For the Nine Months Ended September 30, 2012

(In thousands) (Unaudited)

	CRC Health Corporation			Subsidiary Guarantors			Eliminations		Consolidated
Cash flows from operating activities:
Net cash provided by operating activities	$	18,658		$	24,430		$	—	$	43,088
Cash flows from investing activities:
Additions of property and equipment		(2,848	)		(8,480	)		—		(11,328	)
Proceeds from the sale of property and equipment		—			691			—		691
Acquisition of non-controlling interest		—			(500	)		—		(500	)
Other investing activities		(101	)		—			—		(101	)
Net cash used in investing activities		(2,949	)		(8,289	)		—		(11,238	)
Cash flows from financing activities:
Intercompany transfers		9,673			(9,673	)		—		—
Borrowings of long-term debt		84,096			—			—		84,096
Repayment of long-term debt		(87,638	)		(480	)		—		(88,118	)
Borrowings on revolving line of credit		18,000			—			—		18,000
Repayments on revolving line of credit		(27,500	)		—			—		(27,500	)
Capital distributed to Parent		(9,554	)		—			—		(9,554	)
Capitalized financing costs		(2,786	)		—			—		(2,786	)
Net cash (used in) provided by financing activities		(15,709	)		(10,153	)		—		(25,862	)
Net increase in cash and cash equivalents		—			5,988			—		5,988
Cash and cash equivalents — beginning of period		—			10,183			—		10,183
Cash and cash equivalents — end of period	$	—		$	16,171		$	—	$	16,171

Condensed Consolidating Statements of Cash Flows

For the Nine Months Ended September 30, 2011

(In thousands) (Unaudited)

	CRC Health Corporation			Subsidiary Guarantors			Eliminations		Consolidated
Cash flows from operating activities:
Net cash provided by operating activities	$	11,038		$	23,758		$	—	$	34,796
Cash flows from investing activities:
Additions of property and equipment		(4,432	)		(8,572	)		—		(13,004	)
Proceeeds from the same of property and equipment		—			152			—		152
Other investing activities		(91	)		—			—		(91	)
Net cash used in investing activities		(4,523	)		(8,420	)		—		(12,943	)
Cash flows from financing activities:
Intercompany transfers		5,467			(5,467	)		—		—
Repayment of long-term debt		(9,697	)		(2,912	)		—		(12,609	)
Borrowings on revolving line of credit		9,500			—			—		9,500
Repayments on revolving line of credit		(7,000	)		—			—		(7,000	)
Capital distributed to Parent		(1,616	)		—			—		(1,616	)
Capitalized financing costs		(3,169	)		—			—		(3,169	)
Net cash used in financing activities		(6,515	)		(8,379	)		—		(14,894	)
Net increase in cash and cash equivalents		—			6,959			—		6,959
Cash and cash equivalents — beginning of period		—			7,111			—		7,111
Cash and cash equivalents — end of period	$	—		$	14,070		$	—	$	14,070