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 June 30, 2014

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: 001-35331

ACADIA HEALTHCARE COMPANY, INC.

(Exact name of registrant as specified in its charter)

Delaware	45-2492228
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

830 Crescent Centre Drive, Suite 610

Franklin, Tennessee 37067

(Address, including zip code, of registrant’s principal executive offices)

(615) 861-6000

(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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	x	Accelerated filer	¨
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	¨

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

As of July 30, 2014, there were 59,815,482 shares of the registrant’s common stock outstanding.

ACADIA HEALTHCARE COMPANY, INC.

QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION
Item 1. Financial Statements	1
Condensed Consolidated Balance Sheets (Unaudited) as of June 30, 2014 and December 31, 2013	1
Condensed Consolidated Statements of Operations (Unaudited) for the Three and Six Months Ended June  30, 2014 and 2013	2
Condensed Consolidated Statement of Equity (Unaudited) for the Six Months Ended June 30, 2014	3
Condensed Consolidated Statements of Cash Flows (Unaudited) for the Six Months Ended June 30, 2014 and 2013	4
Notes to Condensed Consolidated Financial Statements (Unaudited)	5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3. Quantitative and Qualitative Disclosures About Market Risk	36
Item 4. Controls and Procedures	36
PART II – OTHER INFORMATION
Item 1. Legal Proceedings	37
Item 1A. Risk Factors	37
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	52
Item 6. Exhibits	52
SIGNATURES	54

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

Acadia Healthcare Company, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

	June 30, 2014		December 31, 2013
	(In thousands, except share and per share amounts)
ASSETS
Current assets:
Cash and cash equivalents	$	277,744	$	4,569
Accounts receivable, net of allowance for doubtful accounts of $19,894 and $18,345, respectively		110,904		95,885
Deferred tax assets		12,756		15,703
Other current assets		48,192		28,969
Total current assets		449,596		145,126
Property and equipment, net		419,386		370,109
Goodwill		665,695		661,549
Intangible assets, net		20,852		20,568
Deferred tax assets – noncurrent		4,227		—
Other assets		32,796		27,307
Total assets	$	1,592,552	$	1,224,659
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt	$	11,445	$	15,195
Accounts payable		31,515		36,026
Accrued salaries and benefits		39,445		37,721
Other accrued liabilities		20,260		25,748
Total current liabilities		102,665		114,690
Long-term debt		555,812		601,941
Deferred tax liabilities – noncurrent		17,894		7,971
Other liabilities		20,959		19,347
Total liabilities		697,330		743,949
Equity:
Preferred stock, $0.01 par value; 10,000,000 shares authorized, no shares issued		—		—
Common stock, $0.01 par value; 90,000,000 shares authorized; 59,161,654 and 50,070,980 issued and outstanding as of June 30, 2014 and December 31, 2013, respectively		592		501
Additional paid-in capital		840,719		461,807
Retained earnings		53,911		18,402
Total equity		895,222		480,710
Total liabilities and equity	$	1,592,552	$	1,224,659

See accompanying notes.

1

Acadia Healthcare Company, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
	(In thousands, except per share amounts)
Revenue before provision for doubtful accounts	$	220,664		$	182,951		$	426,783		$	348,656
Provision for doubtful accounts		(6,861	)		(5,457	)		(11,562	)		(9,949	)
Revenue		213,803			177,494			415,221			338,707
Salaries, wages and benefits (including equity-based compensation expense of $2,406, $1,812, $4,170 and $2,413, respectively)		122,473			100,764			240,048			195,115
Professional fees		10,891			9,324			21,273			18,338
Supplies		10,596			9,613			20,660			18,211
Rents and leases		2,889			2,394			5,658			4,721
Other operating expenses		24,646			20,096			47,756			37,079
Depreciation and amortization		5,935			4,212			11,371			7,834
Interest expense, net		9,730			9,445			19,437			18,207
Debt extinguishment costs		—			—			—			9,350
Gain on foreign currency derivatives		(13,735	)		—			(13,735	)		—
Transaction-related expenses		3,016			1,355			4,595			2,829
Total expenses		176,441			157,203			357,063			311,684
Income from continuing operations before income taxes		37,362			20,291			58,158			27,023
Provision for income taxes		14,905			8,020			22,680			10,698
Income from continuing operations		22,457			12,271			35,478			16,325
(Loss) income from discontinued operations, net of income taxes		(6	)		(74	)		31			(390	)
Net income	$	22,451		$	12,197		$	35,509		$	15,935
Basic earnings per share:
Income from continuing operations	$	0.43		$	0.24		$	0.70		$	0.33
(Loss) income from discontinued operations		—			—			—			(0.01	)
Net income	$	0.43		$	0.24		$	0.70		$	0.32
Diluted earnings per share:
Income from continuing operations	$	0.43		$	0.24		$	0.69		$	0.33
(Loss) income from discontinued operations		—			—			—			(0.01	)
Net income	$	0.43		$	0.24		$	0.69		$	0.32
Weighted-average shares outstanding:
Basic		51,616			50,009			50,872			49,961
Diluted		51,819			50,282			51,174			50,196

See accompanying notes.

2

Acadia Healthcare Company, Inc.

Condensed Consolidated Statement of Equity

(Unaudited)

	Common Stock				Additional Paid-			Retained
	Shares		Amount		in Capital			Earnings		Total
Balance at January 1, 2014		50,071	$	501	$	461,807		$	18,402	$	480,710
Common stock issued under stock incentive plans		209		2		568			—		570
Common stock withheld for minimum statutory taxes		—		—		(3,552	)		—		(3,552	)
Equity-based compensation expense		—		—		4,170			—		4,170
Excess tax benefit from equity awards		—		—		3,479			—		3,479
Issuance of common stock, net		8,882		89		374,247			—		374,336
Net income		—		—		—			35,509		35,509
Balance at June 30, 2014		59,162	$	592	$	840,719		$	53,911	$	895,222

See accompanying notes.

3

Acadia Healthcare Company, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Six Months Ended June 30,
	2014			2013
	(In thousands)
Operating activities:
Net income		35,509			15,935
Adjustments to reconcile net income to net cash provided by continuing operating activities:
Depreciation and amortization		11,371			7,834
Amortization of debt issuance costs		1,334			1,110
Equity-based compensation expense		4,170			2,413
Deferred income tax expense		9,097			5,392
(Income) loss from discontinued operations, net of taxes		(31	)		390
Debt extinguishment costs		—			9,350
Gain on foreign currency derivatives		(13,735	)		—
Other		25			14
Change in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable, net		(15,303	)		(10,557	)
Other current assets		(4,792	)		107
Other assets		(578	)		(807	)
Accounts payable and other accrued liabilities		(1,300	)		1,038
Accrued salaries and benefits		1,782			(3,074	)
Other liabilities		1,701			458
Net cash provided by continuing operating activities		29,250			29,603
Net cash used in discontinued operating activities		(11	)		(358	)
Net cash provided by operating activities		29,239			29,245
Investing activities:
Cash paid for acquisitions, net of cash acquired		(10,000	)		(121,731	)
Cash paid for capital expenditures		(43,323	)		(29,709	)
Cash paid for real estate acquisitions		(18,326	)		(3,959	)
Other		(439	)		(554	)
Net cash used in investing activities		(72,088	)		(155,953	)
Financing activities:
Borrowings on long-term debt		7,500			150,000
Borrowings on revolving credit facility		59,500			8,000
Principal payments on revolving credit facility		(113,000	)		(8,000	)
Principal payments on long-term debt		(3,750	)		(1,875	)
Repayment of long-term debt		—			(52,500	)
Payment of debt issuance costs		(5,810	)		(4,307	)
Payment of premium on note redemption		—			(6,759	)
Issuance of common stock, net		374,336			—
Common stock withheld for minimum statutory taxes, net		(2,981	)		(1,062	)
Excess tax benefit from equity awards		3,479			1,211
Cash paid for contingent consideration		(3,250	)		—
Net cash provided by financing activities		316,024			84,708
Net increase (decrease) in cash and cash equivalents		273,175			(42,000	)
Cash and cash equivalents at beginning of the period		4,569			49,399
Cash and cash equivalents at end of the period	$	277,744		$	7,399
Effect of acquisitions:
Assets acquired, excluding cash	$	10,500		$	146,062
Liabilities assumed		—			(12,647	)
Prior year deposits paid for acquisitions		(500	)		(11,684	)
Cash paid for acquisitions, net of cash acquired	$	10,000		$	121,731

See accompanying notes.

4

Acadia Healthcare Company, Inc.

Notes to Condensed Consolidated Financial Statements

June 30, 2014

(Unaudited)

1. Description of Business and Basis of Presentation

Description of Business

Acadia Healthcare Company, Inc. (the “Company”) develops and operates inpatient psychiatric facilities, residential treatment centers, group homes, substance abuse facilities and facilities providing outpatient behavioral healthcare services to serve the behavioral health and recovery needs of communities throughout the United States. At June 30, 2014, the Company operated 52 behavioral healthcare facilities with over 4,400 licensed beds in 24 states and Puerto Rico. On July 1, 2014, the Company completed its acquisition of Partnerships in Care, which is the second largest independent provider of inpatient behavioral healthcare services in the United Kingdom, operating 23 inpatient behavioral healthcare facilities with over 1,200 beds.

Basis of Presentation

The business of the Company is conducted through limited liability companies and C-corporations, each of which is a direct or indirect wholly-owned subsidiary of the Company. The Company’s consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, all of which are 100% owned. All intercompany accounts and transactions have been eliminated in consolidation.

The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation of our financial position and results of operations have been included. The Company’s fiscal year ends on December 31 and interim results are not necessarily indicative of results for a full year or any other interim period. The condensed consolidated balance sheet at December 31, 2013 has been derived from the audited financial statements as of that date. The information contained in these condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto for the fiscal year ended December 31, 2013 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 21, 2014. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Certain reclassifications have been made to prior years to conform to the current year presentation.

2. Earnings Per Share

Basic and diluted earnings per share are calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 260, “Earnings Per Share,” based on the weighted-average number of shares outstanding in each period and dilutive stock options, unvested shares and warrants, to the extent such securities have a dilutive effect on earnings per share.

5

The following table sets forth the computation of basic and diluted earnings per share for the three months ended June 30, 2014 and 2013 (in thousands except per share amounts):

	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014		2013
Numerator:
Basic and diluted earnings per share:
Income from continuing operations	$	22,457		$	12,271		$	35,478	$	16,325
(Loss) income from discontinued operations		(6	)		(74	)		31		(390	)
Net income	$	22,451		$	12,197		$	35,509	$	15,935
Denominator:
Weighted average shares outstanding for basic earnings per share		51,616			50,009			50,872		49,961
Effect of dilutive instruments		203			273			302		235
Shares used in computing diluted earnings per common share		51,819			50,282			51,174		50,196
Basic earnings per share:
Income from continuing operations	$	0.43		$	0.24		$	0.70	$	0.33
(Loss) income from discontinued operations		—			—			—		(0.01	)
Net income	$	0.43		$	0.24		$	0.70	$	0.32
Diluted earnings per share:
Income from continuing operations	$	0.43		$	0.24		$	0.69	$	0.33
(Loss) income from discontinued operations		—			—			—		(0.01	)
Net income	$	0.43		$	0.24		$	0.69	$	0.32

Approximately 0.6 million and 0.4 million shares of common stock issuable upon exercise of outstanding stock option awards were excluded from the calculation of diluted earnings per share for the three months ended June 30, 2014 and 2013, respectively, because their effect would have been anti-dilutive. Approximately 0.5 million and 0.7 million shares of common stock issuable upon exercise of outstanding stock option awards were excluded from the calculation of diluted earnings per share for the six months ended June 30, 2014 and 2013, respectively, because their effect would have been anti-dilutive.

3. Acquisitions

Pacific Grove

On January 1, 2014, the Company completed its acquisition of the assets of Pacific Grove Hospital (“Pacific Grove”), an inpatient psychiatric facility with 68 licensed beds located in Riverside, California, for cash consideration of $10.5 million.

2013 Acquisitions

On December 1, 2013, the Company completed its acquisition of the assets of Cascade Behavioral Hospital (“Cascade”). On October 1, 2013, the Company completed its acquisition of the assets of Longleaf Hospital (“Longleaf”). On August 1, 2013, the Company completed its acquisition of The Refuge, a Healing Place (“The Refuge”). On May 1, 2013, the Company completed its acquisition of two facilities from United Medical Corporation (the “UMC Facilities”). On January 31, 2013, the Company completed its acquisition of DMC-Memphis, Inc. d/b/a Delta Medical Center (“Delta”). On January 1, 2013, the Company completed its acquisition of the assets of Greenleaf Center (“Greenleaf”).

Summary of Acquisitions

The Company selectively seeks opportunities to expand and diversify its base of operations by acquiring additional facilities. The majority of the goodwill associated with the acquisitions completed in 2014 and 2013 is deductible for federal income tax purposes. The fair values assigned to certain assets and liabilities assumed by the Company have been estimated on a preliminary basis and are subject to change as new facts and circumstances emerge that were present at the date of acquisition. Specifically, the Company is further assessing the valuation of certain tax matters as well as certain receivables and assumed liabilities of Pacific Grove, Cascade, Longleaf and The Refuge. The Company expects to finalize its analyses as the necessary information becomes available to complete the measurement process. Once finalized, the Company will adjust the application of the acquisition method of accounting to reflect its final valuations.

6

The preliminary fair values of assets acquired during the six months ended June 30, 2014 in connection with the Pacific Grove acquisition were as follows (in thousands):

Property and equipment	$	6,500
Goodwill		3,796
Intangible assets		204
Total assets acquired		10,500
Total liabilities assumed		—
Net assets acquired	$	10,500

The fair values of assets acquired and liabilities assumed during 2013, at the corresponding acquisition dates, were as follows (in thousands):

	UMC Facilities		Other		Total
Cash	$	52	$	873	$	925
Accounts receivable		4,961		5,868		10,829
Prepaid expenses and other current assets		721		3,067		3,788
Property and equipment		22,347		42,672		65,019
Goodwill		67,559		37,586		105,145
Intangible assets		1,505		1,910		3,415
Other assets		4,712		29		4,741
Total assets acquired		101,857		92,005		193,862
Accounts payable		1,535		7,487		9,022
Accrued salaries and benefits		588		3,079		3,667
Other accrued expenses		315		2,289		2,604
Other liabilities		—		2,360		2,360
Total liabilities assumed		2,438		15,215		17,653
Net assets acquired	$	99,419	$	76,790	$	176,209

Other

The qualitative factors comprising the goodwill acquired through June 30, 2104 in the Pacific Grove, Cascade, Longleaf, The Refuge, the UMC Facilities, Delta and Greenleaf acquisitions (collectively the “2013 and 2014 Acquisitions”) include efficiencies derived through synergies expected by the elimination of certain redundant corporate functions and expenses, the ability to leverage call center referrals to a broader provider base, coordination of services provided across the combined network of facilities, achievement of operating efficiencies by benchmarking performance, and applying best practices throughout the combined companies.

Transaction-related expenses comprised the following costs for the three and six months ended June 30, 2014 and 2013 (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
Legal, accounting and other costs	$	3,016	$	798	$	4,136	$	1,803
Severance and contract termination costs		—		557		459		1,026
	$	3,016	$	1,355	$	4,595	$	2,829

7

Partnerships in Care Acquisition

On July 1, 2014, the Company completed its acquisition of Partnerships in Care for net cash consideration of $662.0 million, which is net of cash acquired of $12.0 million and the gain on settlement of the foreign currency derivatives of $15.3 million. The Company used $300.0 million of proceeds from the July 1, 2014 sale of 5.125% Senior Notes due 2022 (the “5.125% Senior Notes”) (described in Note 7), $374.3 million of proceeds from the June 2014 sale of Acadia common stock (described in Note 8) and borrowings under the Company’s Amended and Restated Senior Secured Credit Facility to fund the acquisition. Partnerships in Care is the second largest independent provider of inpatient behavioral healthcare services in the United Kingdom, operating 23 inpatient behavioral healthcare facilities with over 1,200 beds.

The preliminary fair values of assets acquired and liabilities assumed in connection with the Partnerships in Care acquisition are estimated as follows (in thousands). As the acquisition was recently completed on July 1, 2014, these amounts have been estimated on a preliminary basis from historical financial information and are subject to change as acquisition accounting is finalized.

	Partnerships in Care
Cash	$	12,000
Accounts receivable		7,300
Prepaid expenses and other current assets		5,000
Property and equipment		610,000
Goodwill		98,000
Intangible assets		3,000
Total assets acquired		735,300
Accounts payable		6,000
Accrued salaries and benefits		6,000
Other accrued expenses		8,000
Deferred tax liabilities – noncurrent		20,000
Other liabilities		6,000
Total liabilities assumed		46,000
Net assets acquired	$	689,300

Pro Forma Information

The condensed consolidated statements of operations for the three and six months ended June 30, 2014 include revenue of $34.2 million and $67.7 million, respectively, and income from continuing operations before income taxes of $2.5 million and $4.7 million, respectively, related to acquisitions completed in 2014 (through June 30, 2014) and 2013. The condensed consolidated statements of operations for the three and six months ended June 30, 2013 include revenue of $18.2 million and $28.1 million, respectively, and loss from continuing operations before income taxes of $0.9 million and $2.3 million, respectively, related to acquisitions completed in 2013.

The following table provides certain pro forma financial information for the Company as if the 2013 and 2014 Acquisitions and the acquisition of Partnerships in Care on July 1, 2014 had occurred as of January 1, 2013 (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
Revenue	$	286,675	$	254,408	$	557,568	$	500,496
Income from continuing operations, before income taxes	$	23,616	$	9,924	$	30,471	$	6,913

4. Goodwill and Other Intangible Assets

The following table summarizes changes in goodwill during the three months ended June 30, 2014 (in thousands):

Balance at January 1, 2014	$	661,549
Increase from 2014 acquisitions		3,796
Other		350
Balance at June 30, 2014	$	665,695

8

Other identifiable intangible assets and related accumulated amortization consisted of the following as of June 30, 2014 and December 31, 2013 (in thousands):

	Gross Carrying Amount				Accumulated Amortization
	June 30, 2014		December 31, 2013		June 30, 2014			December 31, 2013
Intangible assets subject to amortization:
Contract intangible assets	$	2,100	$	2,100	$	(1,120	)	$	(910	)
Non-compete agreements		1,247		1,247		(1,088	)		(1,021	)
		3,347		3,347		(2,208	)		(1,931	)
Intangible assets not subject to amortization:
Licenses and accreditations		8,595		8,391		—			—
Trade names		3,000		3,000		—			—
Certificates of need		8,118		7,761		—			—
		19,713		19,152		—			—
Total	$	23,060	$	22,499	$	(2,208	)	$	(1,931	)

In connection with the Pacific Grove acquisition, the Company acquired a license and accreditation intangible asset with a fair value of $0.2 million.

In connection with the Greenleaf acquisition, the Company acquired a certificate of need with a fair value of $0.6 million. In connection with the Delta acquisition, the Company acquired intangible assets with a fair value of $0.8 million consisting of licenses and accreditations of $0.2 million and a certificate of need of $0.6 million. In connection with the UMC Facilities’ acquisition, the Company acquired intangible assets with a fair value of $1.5 million consisting of licenses and accreditations of $0.2 million and certificates of need of $1.3 million. In connection with the Longleaf acquisition, the Company acquired a license and accreditation intangible asset with a fair value of $0.2 million. In connection with the Cascade acquisition, the Company acquired a certificate of need with a fair value of $0.3 million. The Company incurred and capitalized $0.4 million and $0.3 million during the six months ended June 30, 2014 and 2013, respectively, related to costs to obtain certificates of need.

The non-compete agreements are being amortized on a straight-line basis over the term of the agreements. The contract intangible is amortized on a straight-line basis over the estimated five-year term of the related contract.

Amortization expense related to definite-lived intangible assets was $0.1 million and $0.2 million for the three months ended June 30, 2014 and 2013, respectively, and $0.3 million and $0.4 million for the six months ended June 30, 2014 and 2013, respectively. Estimated amortization expense for the years ending December 31, 2014, 2015, 2016, 2017 and 2018 is $0.5 million, $0.5 million, $0.4 million, $0 and $0, respectively. The Company’s licenses and accreditations, trade names and certificate of need intangible assets have indefinite lives and are, therefore, not subject to amortization.

5. Property and Equipment

Property and equipment consists of the following as of June 30, 2014 and December 31, 2013 (in thousands):

	June 30, 2014			December 31, 2013
Land	$	66,955		$	58,947
Building and improvements		306,219			259,523
Equipment		43,020			36,742
Construction in progress		43,450			44,186
		459,644			399,398
Less accumulated depreciation		(40,258	)		(29,289	)
Property and equipment, net	$	419,386		$	370,109

6. Discontinued Operations

In June 2012, the Company disposed of its PsychSolutions facility located in Miami, Florida and recognized a pretax loss on disposal of $0.2 million, which had been included in income (loss) from discontinued operations on the consolidated statements of operations. The results of operations of this facility has been reported as discontinued operations in the accompanying consolidated financial statements.

9

A summary of results from discontinued operations is as follows (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014		2013
Revenue	$	—		$	—		$	—	$	—
(Loss) income from discontinued operations, net of income taxes	$	(6	)	$	(74	)	$	31	$	(390	)

7. Long-Term Debt

Long-term debt consisted of the following (in thousands):

	June 30, 2014			December 31, 2013
Amended and Restated Senior Credit Facility:
Senior Secured Term Loans	$	296,250		$	292,500
Senior Secured Revolving Line of Credit		—			53,500
12.875% Senior Notes due 2018		96,314			96,216
6.125% Senior Notes due 2021		150,000			150,000
9.0% and 9.5% Revenue Bonds		24,693			24,920
		567,257			617,136
Less: current portion		(11,445	)		(15,195	)
Long-term debt	$	555,812		$	601,941

Amended and Restated Senior Credit Facility

The Company entered into a senior secured credit facility (the “Senior Secured Credit Facility”), administered by Bank of America, N.A., on April 1, 2011. On December 31, 2012, the Company entered into an Amended and Restated Credit Agreement (the “Amended and Restated Credit Agreement”) which amended and restated the Senior Secured Credit Facility (“Amended and Restated Senior Credit Facility”).

On February 13, 2014, the Company entered into a Fourth Amendment (the “Fourth Amendment”) to the Amended and Restated Credit Agreement, to increase the size of the Amended and Restated Senior Credit Facility and extend the maturity date thereof, which resulted in the Company having a revolving line of credit of up to $300.0 million and term loans of $300.0 million. The Fourth Amendment also reduced the interest rates applicable to the Amended and Restated Senior Credit Facility and provided increased flexibility to the Company in terms of the financial and other restrictive covenants. The Fourth Amendment also provides for a $150.0 million incremental credit facility, with the potential for unlimited additional incremental amounts, provided the Company meets certain financial ratios, in each case subject to customary conditions precedent to borrowing.

On June 16, 2014, the Company entered into a Fifth Amendment (the “Fifth Amendment”) to the Amended and Restated Credit Agreement. The Fifth Amendment specifically permitted the Company’s acquisition of Partnerships in Care , gave the Company the ability to incur a tranche of term loan B debt in the future through its incremental credit facility, and modified certain of the restrictive covenants on miscellaneous investments and incurrence of miscellaneous liens. The restrictive covenants on investments in joint ventures and foreign subsidiaries were also amended such that the Company may now invest, in any given fiscal year, up to five percent (5%) of its total assets in both joint ventures and foreign subsidiaries, respectively; provided that the aggregate amount of investments in both joint ventures and foreign subsidiaries, respectively, may not exceed ten percent (10%) of its total assets over the life of the Amended and Restated Senior Credit Facility; provided further that the aggregate amount of investments made in both joint ventures and foreign subsidiaries collectively pursuant to the foregoing may not exceed fifteen percent (15%) of its total assets. Finally, the Fifth Amendment provided increased flexibility to the Company in terms of its financial covenants.

The Company had $299.6 million of availability under the revolving line of credit as of June 30, 2014, of which $125.0 million was borrowed on July 1, 2014 in connection with the Partnerships in Care acquisition. Borrowings under the revolving line of credit are subject to customary conditions precedent to borrowing. The term loans require quarterly principal payments of $1.9 million for June 30, 2014 to December 31, 2014, $3.8 million for March 31, 2015 to December 31, 2015, $5.6 million for March 31, 2016 to December 31, 2016, $7.5 million for March 31, 2017 to December 31, 2017, and $9.4 million for March 31, 2018 to December 31, 2018, with the remaining principal balance due on the maturity date of February 13, 2019.

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Borrowings under the Amended and Restated Senior Credit Facility are guaranteed by each of the Company’s wholly-owned domestic subsidiaries (other than Park Royal and certain other excluded subsidiaries) and are secured by a lien on substantially all of the assets of the Company and such subsidiaries. Borrowings under the Amended and Restated Senior Credit Facility bear interest at a rate tied to Acadia’s Consolidated Leverage Ratio (defined as consolidated funded debt net of up to $20,000,000 of unrestricted and unencumbered cash to consolidated EBITDA, in each case as defined in the Amended and Restated Credit Agreement). The Applicable Rate (as defined in the Amended and Restated Credit Agreement) for borrowings under the Amended and Restated Senior Credit Facility was 2.75% for Eurodollar Rate Loans (as defined in the Amended and Restated Credit Agreement) and 1.75% for Base Rate Loans (as defined in the Amended and Restated Credit Agreement) at June 30, 2014. Eurodollar Rate Loans bear interest at the Applicable Rate plus the Eurodollar Rate (as defined in the Amended and Restated Credit Agreement) (based upon the LIBOR Rate (as defined in the Amended and Restated Credit Agreement) prior to commencement of the interest rate period). Base Rate Loans bear interest at the Applicable Rate plus the highest of (i) the federal funds rate plus 0.50%, (ii) the prime rate and (iii) the Eurodollar Rate plus 1.0%. As of June 30, 2014, borrowings under the Senior Secured Credit Facility bore interest at a rate of LIBOR plus 2.75%. In addition, we are required to pay a commitment fee on undrawn amounts under the revolving line of credit. We paid a commitment fee of 0.50% for undrawn amounts for the period from January 1, 2013 through February 12, 2014 and 0.40% for undrawn amounts for the period from February 13, 2014 through June 30, 2014. The Amended and Restated Senior Credit Facility matures on February 13, 2019.

The Amended and Restated Credit Agreement requires the Company and its subsidiaries to comply with customary affirmative, negative and financial covenants, including a fixed charge coverage ratio, consolidated leverage ratio and senior secured leverage ratio. The Company may be required to pay all of its indebtedness immediately if it defaults on any of the numerous financial or other restrictive covenants contained in any of its material debt agreements. As of June 30, 2014, the Company was in compliance with such covenants.

12.875% Senior Notes due 2018

On November 1, 2011, the Company issued $150.0 million of 12.875% Senior Notes due 2018 (the “12.875% Senior Notes”) at 98.323% of the aggregate principal amount of $150.0 million, a discount of $2.5 million. The notes bear interest at a rate of 12.875% per annum. The Company pays interest on the notes semi-annually, in arrears, on November 1 and May 1 of each year.

The indenture governing the 12.875% Senior Notes contains covenants that, among other things, limit the Company’s ability and the ability of its restricted subsidiaries to: (i) pay dividends, redeem stock or make other distributions or investments; (ii) incur additional debt or issue certain preferred stock; (iii) transfer or sell assets; (iv) engage in certain transactions with affiliates; (v) create restrictions on dividends or other payments by the restricted subsidiaries; (vi) merge, consolidate or sell substantially all of the Company’s assets; and (vii) create liens on assets.

The 12.875% Senior Notes issued by the Company are guaranteed by each of the Company’s subsidiaries that guarantee the Company’s obligations under the Amended and Restated Senior Credit Facility. The guarantees are full and unconditional and joint and several.

On March 12, 2013, the Company redeemed $52.5 million in principal amount of the 12.875% Senior Notes using a portion of the net proceeds of its December 2012 equity offering pursuant to the provision in the indenture permitting an optional redemption with equity proceeds of up to 35% of the principal amount of 12.875% Senior Notes. The 12.875% Senior Notes were redeemed at a redemption price of 112.875% of the principal amount thereof plus accrued and unpaid interest to, but not including, the redemption date in accordance with the provisions of the indenture governing the 12.875% Senior Notes. As part of the redemption of 35% of the 12.875% Senior Notes, the Company recorded a debt extinguishment charge of $9.4 million, including the premium and write-off of deferred financing costs, which was recorded in debt extinguishment costs in the consolidated statements of operations.

6.125% Senior Notes due 2021

On March 12, 2013, the Company issued $150.0 million of 6.125% Senior Notes due 2021 (the “6.125% Senior Notes”). The 6.125% Senior Notes mature on March 15, 2021 and bear interest at a rate of 6.125% per annum, payable semi-annually in arrears on March 15 and September 15 of each year.

The indenture governing the 6.125% Senior Notes contains covenants that, among other things, limit the Company’s ability and the ability of its restricted subsidiaries to: (i) pay dividends, redeem stock or make other distributions or investments; (ii) incur additional debt or issue certain preferred stock; (iii) transfer or sell assets; (iv) engage in certain transactions with affiliates; (v) create restrictions on dividends or other payments by the restricted subsidiaries; (vi) merge, consolidate or sell substantially all of the Company’s assets; and (vii) create liens on assets.

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The 6.125% Senior Notes issued by the Company are guaranteed by each of the Company’s subsidiaries that guarantee the Company’s obligations under the Amended and Restated Credit Facility. The guarantees are full and unconditional and joint and several.

The Company may redeem the 6.125% Senior Notes at its option, in whole or part, at any time prior to March 15, 2016, at a price equal to 100% of the principal amount of the 6.125% Senior Notes redeemed, plus accrued and unpaid interest to the redemption date and plus an applicable premium. The Company may redeem the 6.125% Senior Notes, in whole or in part, on or after March 15, 2016, at the redemption prices set forth in the indenture governing the 6.125% Senior Notes plus accrued and unpaid interest to the redemption date. At any time on or before March 15, 2016, the Company may elect to redeem up to 35% of the aggregate principal amount of the 6.125% Senior Notes at a redemption price equal to 106.125% of the principal amount thereof, plus accrued and unpaid interest to the redemption date, with the net proceeds of one or more equity offerings.

5.125% Senior Notes due 2022

On July 1, 2014, the Company issued $300.0 million of 5.125% Senior Notes. The 5.125% Senior Notes mature on July 1, 2022 and bear interest at a rate of 5.125% per annum, payable semi-annually in arrears on January 1 and July 1 of each year, beginning on January 1, 2015.

The indenture governing the 5.125% Senior Notes contains covenants that limit, among other things, the Company’s ability and the ability of its restricted subsidiaries to: (i) pay dividends, redeem stock or make other distributions or investments; (ii) incur additional debt or issue certain preferred stock; (iii) transfer or sell assets; (iv) engage in certain transactions with affiliates; (v) create restrictions on dividends or other payments by the restricted subsidiaries; (vi) merge, consolidate or sell substantially all of the Company’s assets and (vii) create liens on assets.

The 5.125% Senior Notes issued by the Company are guaranteed by each of the Company’s subsidiaries that guarantee the Company’s obligations under the Amended and Restated Credit Facility. The guarantees are full and unconditional and joint and several.

The Company may redeem the 5.125% Senior Notes at its option, in whole or part, at any time prior to July 1, 2017, at a price equal to 100% of the principal amount of the 5.125% Senior Notes redeemed, plus accrued and unpaid interest to the redemption date and plus an applicable premium. The Company may redeem the 5.125% Senior Notes, in whole or in part, on or after July 1, 2017, at the redemption prices set forth in the indenture governing the 5.125% Senior Notes plus accrued and unpaid interest to the redemption date. At any time on or before July 1, 2017, the Company may elect to redeem up to 35% of the aggregate principal amount of the 5.125% Senior Notes at a redemption price equal to 105.125% of the principal amount thereof, plus accrued and unpaid interest to the redemption date, with the net proceeds of one or more equity offerings.

9.0% and 9.5% Revenue Bonds

On November 11, 2012, in connection with the acquisition of Park Royal, the Company assumed debt of $23.0 million. The fair market value of the debt assumed was $25.6 million and resulted in a debt premium balance being recorded as of the acquisition date. The debt consisted of $7.5 million and $15.5 million of Lee County (Florida) Industrial Development Authority Healthcare Facilities Revenue Bonds, Series 2010 with stated interest rates of 9.0% and 9.5% (“9.0% and 9.5% Revenue Bonds”), respectively. The 9.0% bonds in the amount of $7.5 million have a maturity date of December 1, 2030 and require yearly principal payments beginning in 2013. The 9.5% bonds in the amount of $15.5 million have a maturity date of December 1, 2040 and require yearly principal payments beginning in 2031. The principal payments establish a bond sinking fund to be held with the trustee and shall be sufficient to redeem the principal amounts of the 9.0% and 9.5% Revenue Bonds on their respective maturity dates. As of June 30, 2014 and December 31, 2013, $2.3 million was recorded within other assets on the balance sheet related to the debt service reserve fund requirements. The yearly principal payments, which establish a bond sinking fund, will increase the debt service reserve fund requirements. The bond premium amount of $2.6 million is amortized as a reduction of interest expense over the life of the revenue bonds using the effective interest method.

8. Equity

Preferred Stock

The Company’s amended and restated certificate of incorporation provides that up to 10,000,000 shares of preferred stock may be issued. The Board of Directors has the authority to issue preferred stock in one or more series and to fix for each series the voting powers (full, limited or none), and the designations, preferences and relative participating, optional or other special rights and qualifications, limitations or restrictions on the stock and the number of shares constituting any series and the designations of this series, without any further vote or action by the stockholders.

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Common Stock

The Company’s amended and restated certificate of incorporation provides that up to 90,000,000 shares of common stock may be issued. Holders of the Company’s common stock are entitled to one vote for each share held of record on all matters on which stockholders may vote. There are no preemptive, conversion, redemption or sinking fund provisions applicable to shares of the Company’s common stock. In the event of liquidation, dissolution or winding up, holders of the Company’s common stock are entitled to share ratably in the assets available for distribution, subject to any prior rights of any holders of preferred stock then outstanding. Delaware law prohibits the Company from paying any dividends unless it has capital surplus or net profits available for this purpose. In addition, the Amended and Restated Senior Credit Facility imposes restrictions on the Company’s ability to pay dividends.

Equity Offering

On June 17, 2014, the Company completed the offering of 8,881,794 shares of common stock (including shares sold pursuant to the exercise of the over-allotment option that the Company granted to the underwriters as part of the offering) at a price of $44.00 per share. The net proceeds to the Company from the sale of the shares, after deducting the underwriting discount of $15.6 million and additional offering-related expenses of $0.8 million, were $374.3 million. The Company used the net offering proceeds to partially fund the purchase price for the acquisition of Partnerships in Care on July 1, 2014.

9. Equity-Based Compensation

Equity Incentive Plans

The Company issues stock-based awards, including stock options, restricted stock and restricted stock units, to certain officers, employees and non-employee directors under the Acadia Healthcare Company, Inc. Incentive Compensation Plan (the “Equity Incentive Plan”). As of June 30, 2014, a maximum of 4,700,000 shares of the Company’s common stock were authorized for issuance as stock options, restricted stock and restricted stock units or other share-based compensation under the Equity Incentive Plan, of which 2,760,838 were available for future grant. Stock options may be granted for terms of up to ten years. The Company recognizes expense on all share-based awards on a straight-line basis over the requisite service period of the entire award. Grants to employees generally vest in annual increments of 25% each year, commencing one year after the date of grant. The exercise prices of stock options are equal to the most recent closing price of the Company’s common stock on the date of grant.

The Company recognized $2.4 million and $1.8 million in equity-based compensation expense for the three months ended June 30, 2014 and 2013, respectively, and $4.2 million and $2.4 million for the six months ended June 30, 2014 and 2013, respectively. As of June 30, 2014, there was $26.2 million of unrecognized compensation expense related to unvested options, restricted stock and restricted stock units, which is expected to be recognized over the remaining weighted average vesting period of 1.5 years.

As of June 30, 2014, there were no warrants outstanding and exercisable. The Company recognized a deferred income tax benefit of $1.0 million and $0.7 million for the three months ended June 30, 2014 and 2013, respectively, related to equity-based compensation expense. The Company recognized a deferred income tax benefit of $1.7 million and $0.9 million for the six months ended June 30, 2014 and 2013, respectively, related to equity-based compensation expense. The actual tax benefit realized from stock options exercised during the three months ended June 30, 2014 and 2013 was $0.8 million and $0.6 million, respectively. The actual tax benefit realized from stock options exercised during the six months ended June 30, 2014 was $3.5 million and $1.2 million, respectively.

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Stock option activity during 2013 and 2014 was as follows (aggregate intrinsic value in thousands):

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Options outstanding at January 1, 2013		555,097		$	13.13		7.53	$	5,632
Options granted		411,800			30.55		9.30		2,059
Options exercised		(126,662	)		9.36		N/A		2,803
Options cancelled		(41,426	)		23.50		N/A		N/A
Options outstanding at December 31, 2013		798,809			21.93		8.20		10,700
Options granted		187,463			50.32		9.68		41
Options exercised		(141,338	)		13.45		N/A		4,126
Options cancelled		(40,789	)		31.37		N/A		N/A
Options outstanding at June 30, 2014		804,145			28.90		8.28		15,131
Options exercisable at December 31, 2013		133,647		$	11.15		4.81	$	3,472
Options exercisable at June 30, 2014		144,970		$	20.45		6.15	$	4,537

Restricted stock activity during 2013 and 2014 was as follows:

	Number of Shares			Weighted Average Grant-Date Fair Value
Unvested at January 1, 2013		318,063		$	15.73
Granted		290,845			31.31
Cancelled		(53,056	)		21.27
Vested		(94,155	)		15.52
Unvested at December 31, 2013		461,697		$	24.96
Granted		227,031			49.52
Cancelled		(45,994	)		32.83
Vested		(103,966	)		23.35
Unvested at June 30, 2014		538,768		$	34.92

Restricted stock unit activity during 2013 and 2014 was as follows:

	Number of Units			Weighted Average Grant-Date Fair Value
Unvested at January 1, 2013		68,628		$	16.11
Granted		72,876			29.39
Cancelled		—			—
Vested		(45,753	)		16.11
Unvested at December 31, 2013		95,751		$	23.05
Granted		108,449			50.75
Cancelled		—			—
Vested		(79,087	)		21.81
Unvested at June 30, 2014		125,113		$	38.73

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The grant-date fair value of the Company’s stock options is estimated using the Black-Scholes option pricing model. The following table summarizes the grant-date fair value of options and the assumptions used to develop the fair value estimates for options granted during the six months ended June 30, 2014 and year ended December 31, 2013:

	June 30, 2014			December 31, 2013
Weighted average grant-date fair value of options	$	18.07		$	11.62
Risk-free interest rate		1.7	%		1.0	%
Expected volatility		36	%		40	%
Expected life (in years)		5.5			5.5

The Company’s estimate of expected volatility for stock options is based upon the volatility of guideline companies given the lack of sufficient historical trading experience of the Company’s common stock. The risk-free interest rate is the approximate yield on United States Treasury Strips having a life equal to the expected option life on the date of grant. The expected life is an estimate of the number of years an option will be held before it is exercised.

10. Income Taxes

The provision for income taxes for continuing operations for the three months ended June 30, 2014 and 2013 reflects effective tax rates of 39.9% and 39.5%, respectively. The increase in the tax rate for the three months ended June 30, 2014 was primarily attributable to non-deductible transaction-related expenses associated with acquisition of Partnerships in Care on July 1, 2014. The provision for income taxes for continuing operations for the six months ended June 30, 2014 and 2013 reflects effective tax rates of 39.0% and 39.6%, respectively. The decrease in the tax rate for the six months ended June 30, 2014 was primarily attributable to various state tax planning initiatives and restructurings partially offset by non-deductible transaction-related expenses associated with acquisition of Partnerships in Care on July 1, 2014.

11. Derivatives

The Company entered into two foreign currency forward contracts in June 2014 in connection with the Partnerships in Care acquisition. The foreign currency forward contracts limited the economic risk of changes in the foreign exchange rate between US Dollars (“USD”) and British Pounds (“GBP”) associated with the payment of the purchase price in GBP on July 1, 2014. These foreign currency forward contracts did not meet the hedge accounting criteria under Accounting Standards Codification 815, Derivatives and Hedging. As such, changes in fair value have been recorded within earnings in the current period. As of June 30, 2014, a receivable for the fair value of the financial instruments of $13.7 million is included in other current assets. The final fair value of the foreign currency forward contracts, settled on July 1, 2014, was $15.3 million.

12. Fair Value Measurements

The carrying amounts reported for cash and cash equivalents, accounts receivable, other current assets, accounts payable and other current liabilities approximate fair value because of the short-term maturity of these instruments.

The carrying amounts and fair values of the Company’s Amended and Restated Senior Credit Facility, 12.875% Senior Notes, 6.125% Senior Notes, 9.0% and 9.5% Revenue Bonds, contingent consideration liability and foreign currency derivatives as of June 30, 2014 and December 31, 2013 were as follows (in thousands):

	Carrying Amount				Fair Value
	June 30, 2014		December 31, 2013		June 30, 2014		December 31, 2013
Amended and Restated Senior Credit Facility	$	296,250	$	346,000	$	296,250	$	346,000
12.875% Senior Notes due 2018	$	96,314	$	96,216	$	115,050	$	118,706
6.125% Senior Notes due 2021	$	150,000	$	150,000	$	157,125	$	155,625
9.0% and 9.5% Revenue Bonds	$	24,693	$	24,920	$	24,693	$	24,920
Contingent consideration liability	$	3,750	$	6,500	$	3,750	$	6,500
Foreign currency forward contracts	$	13,735		—	$	13,735		—

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The Company’s Amended and Restated Senior Credit Facility, 12.875% Senior Notes, 6.125% Senior Notes and 9.0% and 9.5% Revenue Bonds were categorized as Level 2 in the GAAP fair value hierarchy. Fair values were based on trading activity among the Company’s lenders and the average bid and ask price as determined using published rates.

The fair value of the contingent consideration liability at June 30, 2014 was categorized as Level 3 in the GAAP fair value hierarchy. The contingent consideration liability was valued using a probability-weighted discounted cash flow method. This analysis reflected the contractual terms of the purchase agreements and utilized assumptions with regard to future earnings, probabilities of achieving such future earnings and a discount rate. Significant increases with respect to assumptions as to future earnings and probabilities of achieving such future earnings would result in higher fair value measurement while an increase in the discount rate would result in a lower fair value measurement. During the six months ended June 30, 2014, the Company changed its projections of the timing of future payments. This change resulted in a $0.5 million increase in the fair value of the contingent consideration liability, which was recorded in transaction-related expenses in the consolidated statements of operations. During the three months ended June 30, 2014, the Company paid $3.3 million of the estimated $7.0 million contingent consideration liability due to Park Royal achieving certain earnings targets.

The fair value of the foreign currency forward contracts at June 30, 2014 was categorized as Level 2 in the GAAP fair value hierarchy. The foreign currency forward contracts’ fair market value was calculated using the published foreign exchange rate between the USD and GBP as of June 30, 2014 compared to the exchange rate at the dates of the contracts.

13. Commitments and Contingencies

The Company is, from time to time, subject to various claims and legal actions that arise in the ordinary course of the Company’s business, including claims for damages for personal injuries, medical malpractice, breach of contract, tort and employment related claims. In these actions, plaintiffs request a variety of damages, including, in some instances, punitive and other types of damages that may not be covered by insurance. In the opinion of management, the Company is not currently a party to any proceeding that would individually or in the aggregate have a material adverse effect on the Company’s business, financial condition or results of operations.

14. Recently Issued Accounting Standards

In April 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-08, “Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity” (“ASU 2014-08”). ASU 2014-08 raises the threshold for a disposal to qualify as a discontinued operation and requires new disclosures of both discontinued operations and certain other disposals that do not meet the definition of a discontinued operation. ASU 2014-08 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2014. Early adoption is permitted. Management is evaluating the impact of ASU 2014-08 on the Company’s consolidated financial statements and does not expect ASU 2014-08 to have a significant impact on the Company’s consolidated financial statements.

In May 2014, the FASB and the International Accounting Standards Board issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). ASU 2014-09’s core principal is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. ASU 2014-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. Early adoption is not permitted. Management is evaluating the impact of ASU 2014-09 on the Company’s consolidated financial statements and does not expect ASU 2014-09 to have a significant impact on the Company’s consolidated financial statements.

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15. Financial Information for the Company and Its Subsidiaries

The Company conducts substantially all of its business through its subsidiaries. The 12.875% Senior Notes and 6.125% Senior Notes are jointly and severally guaranteed on an unsecured senior basis by all of the Company’s subsidiaries that guarantee the Company’s obligations under the Amended and Restated Credit Facility. Presented below is condensed consolidating financial information for the Company and its subsidiaries as of June 30, 2014 and December 31, 2013, and for the three and six months ended June 30, 2014 and 2013. The information segregates the parent company (Acadia Healthcare Company, Inc.), the combined wholly-owned subsidiary guarantors, the combined non-guarantor subsidiaries and eliminations.

Acadia Healthcare Company, Inc.

Condensed Consolidating Balance Sheets

June 30, 2014

(In thousands) 

	Parent		Combined Subsidiary Guarantors		Combined Non- Guarantors		Consolidating Adjustments			Total Consolidated Amounts
Current assets:
Cash and cash equivalents	$	—	$	274,517	$	3,227	$	—		$	277,744
Accounts receivable, net		—		100,249		10,655		—			110,904
Deferred tax assets		—		17,841		461		(5,546	)		12,756
Other current assets		—		46,868		1,324		—			48,192
Total current assets		—		439,475		15,667		(5,546	)		449,596
Property and equipment, net		—		386,616		32,770		—			419,386
Goodwill		—		568,391		97,304		—			665,695
Intangible assets, net		—		18,862		1,990		—			20,852
Deferred tax assets – noncurrent		2,555		—		5,313		(3,641	)		4,227
Investment in subsidiaries		1,395,166		—		—		(1,395,166	)		—
Other assets		50,417		12,818		2,321		(32,760	)		32,796
Total assets	$	1,448,138	$	1,426,162	$	155,365	$	(1,437,113	)	$	1,592,552
Current liabilities:
Current portion of long-term debt	$	11,250	$	—	$	524	$	(329	)	$	11,445
Accounts payable		—		29,803		1,712		—			31,515
Accrued salaries and benefits		—		37,670		1,775		—			39,445
Other accrued liabilities		10,352		14,330		1,124		(5,546	)		20,260
Total current liabilities		21,602		81,803		5,135		(5,875	)		102,665
Long-term debt		531,314		—		56,929		(32,431	)		555,812
Deferred tax liabilities – noncurrent		—		21,535		—		(3,641	)		17,894
Other liabilities		—		20,959		—		—			20,959
Total liabilities		552,916		124,297		62,064		(41,947	)		697,330
Total equity		895,222		1,301,865		93,301		(1,395,166	)		895,222
Total liabilities and equity	$	1,448,138	$	1,426,162	$	155,365	$	(1,437,113	)	$	1,592,552

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Acadia Healthcare Company, Inc.

Condensed Consolidating Balance Sheets

December 31, 2013

(In thousands)

	Parent		Combined Subsidiary Guarantors		Combined Non- Guarantors		Consolidating Adjustments			Total Consolidated Amounts
Current assets:
Cash and cash equivalents	$	—	$	—	$	6,494	$	(1,925	)	$	4,569
Accounts receivable, net		—		86,597		9,288		—			95,885
Deferred tax assets		—		15,284		419		—			15,703
Other current assets		—		27,886		1,083		—			28,969
Total current assets		—		129,767		17,284		(1,925	)		145,126
Property and equipment, net		—		340,175		29,934		—			370,109
Goodwill		—		564,539		97,010		—			661,549
Intangible assets, net		—		18,578		1,990		—			20,568
Investment in subsidiaries		1,034,160		—		—		(1,034,160	)		—
Other assets		46,236		11,675		8,082		(38,686	)		27,307
Total assets	$	1,080,396	$	1,064,734	$	154,300	$	(1,074,771	)	$	1,224,659
Current liabilities:
Current portion of long-term debt	$	15,000	$	—	$	195	$	—		$	15,195
Accounts payable		—		36,289		1,662		(1,925	)		36,026
Accrued salaries and benefits		—		36,027		1,694		—			37,721
Other accrued liabilities		4,876		19,982		890		—			25,748
Total current liabilities		19,876		92,298		4,441		(1,925	)		114,690
Long-term debt		577,216		—		57,650		(32,925	)		601,941
Deferred tax liabilities – noncurrent		2,594		11,138		—		(5,761	)		7,971
Other liabilities		—		19,347		—		—			19,347
Total liabilities		599,686		122,783		62,091		(40,611	)		743,949
Total equity		480,710		941,951		92,209		(1,034,160	)		480,710
Total liabilities and equity	$	1,080,396	$	1,064,734	$	154,300	$	(1,074,771	)	$	1,224,659

18

Acadia Healthcare Company, Inc.

Condensed Consolidating Statement of Operations

Three Months Ended June 30, 2014

(In thousands)

	Parent			Combined Subsidiary Guarantors			Combined Non- Guarantors			Consolidating Adjustments			Total Consolidated Amounts
Revenue before provision for doubtful accounts	$	—		$	207,143		$	13,521		$	—		$	220,664
Provision for doubtful accounts		—			(5,954	)		(907	)		—			(6,861	)
Revenue		—			201,189			12,614			—			213,803
Salaries, wages and benefits		2,406			114,976			5,091			—			122,473
Professional fees		—			9,691			1,200			—			10,891
Supplies		—			9,967			629			—			10,596
Rents and leases		—			2,613			276			—			2,889
Other operating expenses		—			22,522			2,124			—			24,646
Depreciation and amortization		—			5,581			354			—			5,935
Interest expense, net		9,202			—			528			—			9,730
Gain on foreign currency derivatives		(13,735	)		—			—			—			(13,735	)
Transaction-related expenses		—			3,016			—			—			3,016
Total expenses		(2,127	)		168,366			10,202			—			176,441
Income from continuing operations before income taxes		2,127			32,823			2,412			—			37,362
Equity in earnings of subsidiaries		20,972			—			—			(20,972	)		—
Provision for income taxes		648			13,315			942			—			14,905
Income (loss) from continuing operations		22,451			19,508			1,470			(20,972	)		22,457
Loss from discontinued operations, net of income taxes		—			(6	)		—			—			(6	)
Net income (loss)	$	22,451		$	19,502		$	1,470		$	(20,972	)	$	22,451

19

Acadia Healthcare Company, Inc.

Condensed Consolidating Statement of Operations

Three Months Ended June 30, 2013

(In thousands)

	Parent			Combined Subsidiary Guarantors			Combined Non- Guarantors			Consolidating Adjustments			Total Consolidated Amounts
Revenue before provision for doubtful accounts	$	—		$	174,901			8,050		$	—		$	182,951
Provision for doubtful accounts		—			(4,922	)		(535	)		—			(5,457	)
Revenue		—			169,979			7,515			—			177,494
Salaries, wages and benefits		1,812			95,609			3,343			—			100,764
Professional fees		—			8,787			537			—			9,324
Supplies		—			9,139			474			—			9,613
Rents and leases		—			2,207			187			—			2,394
Other operating expenses		—			18,148			1,948			—			20,096
Depreciation and amortization		—			3,881			331			—			4,212
Interest expense, net		8,688			—			757			—			9,445
Transaction-related expenses		—			1,355			—			—			1,355
Total expenses		10,500			139,126			7,577			—			157,203
(Loss) income from continuing operations before income taxes		(10,500	)		30,853			(62	)		—			20,291
Equity in earnings of subsidiaries		18,500			—			—			(18,500	)		—
(Benefit from) provision for income taxes		(4,197	)		12,316			(99	)		—			8,020
Income (loss) from continuing operations		12,197			18,537			37			(18,500	)		12,271
Loss from discontinued operations, net of income taxes		—			(74	)		—			—			(74	)
Net income (loss)	$	12,197			18,463			37			(18,500	)	$	12,197

20

Acadia Healthcare Company, Inc.

Condensed Consolidating Statement of Operations

Six Months Ended June 30, 2014

(In thousands)

	Parent			Combined Subsidiary Guarantors			Combined Non- Guarantors			Consolidating Adjustments			Total Consolidated Amounts
Revenue before provision for doubtful accounts	$	—		$	400,425		$	26,358		$	—		$	426,783
Provision for doubtful accounts		—			(10,464	)		(1,098	)		—			(11,562	)
Revenue		—			389,961			25,260			—			415,221
Salaries, wages and benefits		4,170			225,629			10,249			—			240,048
Professional fees		—			18,944			2,329			—			21,273
Supplies		—			19,353			1,307			—			20,660
Rents and leases		—			5,108			550			—			5,658
Other operating expenses		—			43,600			4,156			—			47,756
Depreciation and amortization		—			10,666			705			—			11,371
Interest expense, net		18,313			—			1,124			—			19,437
Gain on foreign currency derivatives		(13,735	)		—			—			—			(13,735	)
Transaction-related expenses		—			4,595			—			—			4,595
Total expenses		8,748			327,895			20,420			—			357,063
(Loss) income from continuing operations before income taxes		(8,748	)		62,066			4,840			—			58,158
Equity in earnings of subsidiaries		40,839			—			—			(40,839	)		—
(Benefit from) provision for income taxes		(3,418	)		24,249			1,849			—			22,680
Income (loss) from continuing operations		35,509			37,817			2,991			(40,839	)		35,478
Income from discontinued operations, net of income taxes		—			31			—			—			31
Net income (loss)	$	35,509		$	37,848		$	2,991		$	(40,839	)	$	35,509

21

Acadia Healthcare Company, Inc.

Condensed Consolidating Statement of Operations

Six Months Ended June 30, 2013

(In thousands)

	Parent			Combined Subsidiary Guarantors			Combined Non- Guarantors			Consolidating Adjustments			Total Consolidated Amounts
Revenue before provision for doubtful accounts	$	—		$	336,907		$	11,749		$	—		$	348,656
Provision for doubtful accounts		—			(9,272	)		(677	)		—			(9,949	)
Revenue		—			327,635			11,072			—			338,707
Salaries, wages and benefits		2,413			187,593			5,109			—			195,115
Professional fees		—			17,494			844			—			18,338
Supplies		—			17,548			663			—			18,211
Rents and leases		—			4,478			243			—			4,721
Other operating expenses		—			34,026			3,053			—			37,079
Depreciation and amortization		—			7,307			527			—			7,834
Interest expense, net		17,028			—			1,179			—			18,207
Debt extinguishment costs		9,350			—			—			—			9,350
Transaction-related expenses		—			2,829			—			—			2,829
Total expenses		28,791			271,275			11,618			—			311,684
(Loss) income from continuing operations before income taxes		(28,791	)		56,360			(546	)		—			27,023
Equity in earnings of subsidiaries		33,253			—			—			(33,253	)		—
(Benefit from) provision for income taxes		(11,473	)		22,463			(292	)		—			10,698
Income (loss) from continuing operations		15,935			33,897			(254	)		(33,253	)		16,325
Loss from discontinued operations, net of income taxes		—			(390	)		—			—			(390	)
Net income (loss)	$	15,935		$	33,507		$	(254	)	$	(33,253	)	$	15,935

22

Acadia Healthcare Company, Inc.

Condensed Consolidating Statement of Cash Flows

Six Months Ended June 30, 2014

(In thousands)

	Parent			Combined Subsidiary Guarantors			Combined Non- Guarantors			Consolidating Adjustments			Total Consolidated Amounts
Operating activities:
Net income (loss)	$	35,509		$	37,848		$	2,991		$	(40,839	)	$	35,509
Adjustments to reconcile net income (loss) to net cash (used in) provided by continuing operating activities:
Equity in earnings of subsidiaries		(40,839	)		—			—			40,839			—
Depreciation and amortization		—			10,666			705			—			11,371
Amortization of debt issuance costs		1,560			—			(226	)		—			1,334
Equity-based compensation expense		4,170			—			—			—			4,170
Deferred income tax expense		5,585			3,105			407			—			9,097
Income from discontinued operations, net of taxes		—			(31	)		—			—			(31	)
Gain on foreign currency derivatives		(13,735	)		—			—			—			(13,735	)
Other		—			25			—			—			25
Change in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable, net		—			(16,670	)		1,367			—			(15,303	)
Other current assets		—			(5,033	)		241			—			(4,792	)
Other assets		165			(578	)		—			(165	)		(578	)
Accounts payable and other accrued liabilities		—			(1,584	)		284			—			(1,300	)
Accrued salaries and benefits		—			1,701			81			—			1,782
Other liabilities		—			1,701			—			—			1,701
Net cash (used in) provided by continuing operating activities		(7,585	)		31,150			5,850			(165	)		29,250
Net cash used in discontinued operating activities		—			(11	)		—			—			(11	)
Net cash (used in) provided by operating activities		(7,585	)		31,139			5,850			(165	)		29,239
Investing activities:
Cash paid for acquisitions, net of cash acquired		—			(10,000	)		—			—			(10,000	)
Cash paid for capital expenditures		—			(39,782	)		(3,541	)		—			(43,323	)
Cash paid for real estate acquisitions		—			(18,326	)		—			—			(18,326	)
Other		—			(439	)		—			—			(439	)
Net cash used in investing activities		—			(68,547	)		(3,541	)		—			(72,088	)
Financing activities:
Borrowings on long-term debt		7,500			—			—			—			7,500
Borrowings on revolving credit facility		59,500			—			—			—			59,500
Principal payments on revolving credit facility		(113,000	)		—			—			—			(113,000	)
Principal payments on long-term debt		(3,750	)		—			(165	)		165			(3,750	)
Payment of debt issuance costs		(5,810	)		—			—			—			(5,810	)
Issuance of common stock, net		374,336			—			—			—			374,336
Common stock withheld for minimum statutory taxes, net		(2,981	)		—			—			—			(2,981	)
Excess tax benefit from equity awards		3,479			—			—			—			3,479
Cash paid for contingent consideration		—			(3,250	)		—			—			(3,250	)
Cash (used in) provided by intercompany activity		(311,689	)		315,175			(5,411	)		1,925			—
Net cash provided by (used in) financing activities		7,585			311,925			(5,576	)		2,090			316,024
Net increase (decrease) in cash and cash equivalents		—			274,517			(3,267	)		1,925			273,175
Cash and cash equivalents at beginning of the period		—			—			6,494			(1,925	)		4,569
Cash and cash equivalents at end of the period	$	—		$	274,517		$	3,227		$	—		$	277,744

23

Acadia Healthcare Company, Inc.

Condensed Consolidating Statement of Cash Flows

Six Months Ended June 30, 2013

(In thousands)

	Parent			Combined Subsidiary Guarantors			Combined Non- Guarantors			Consolidating Adjustments			Total Consolidated Amounts
Operating activities:
Net income (loss)	$	15,935		$	33,507		$	(254	)	$	(33,253	)	$	15,935
Adjustments to reconcile net income (loss) to net cash (used in) provided by continuing operating activities:
Equity in earnings of subsidiaries		(33,253	)		—			—			33,253			—
Depreciation and amortization		—			7,307			527			—			7,834
Amortization of debt issuance costs		1,110			—			—			—			1,110
Equity-based compensation expense		2,413			—			—			—			2,413
Deferred income tax expense		108			5,011			273			—			5,392
Income from discontinued operations, net of taxes		—			390			—			—			390
Debt extinguishment costs		9,350			—			—			—			9,350
Other		—			14			—			—			14
Change in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable, net		—			(10,745	)		188			—			(10,557	)
Other current assets		—			219			(112	)		—			107
Other assets		—			(807	)		—			—			(807	)
Accounts payable and other accrued liabilities		—			1,568			(530	)		—			1,038
Accrued salaries and benefits		—			(3,073	)		(1	)		—			(3,074	)
Other liabilities		—			871			(413	)		—			458
Net cash (used in) provided by continuing operating activities		(4,337	)		34,262			(322	)		—			29,603
Net cash used in discontinued operating activities		—			(358	)		—			—			(358	)
Net cash (used in) provided by operating activities		(4,337	)		33,904			(322	)		—			29,245
Investing activities:
Cash paid for acquisitions, net of cash acquired		—			(121,731	)		—			—			(121,731	)
Cash paid for capital expenditures		—			(29,592	)		(117	)		—			(29,709	)
Cash paid for real estate acquisitions		—			(3,959	)		—			—			(3,959	)
Other		—			(554	)		—			—			(554	)
Net cash used in investing activities		—			(155,836	)		(117	)		—			(155,953	)
Financing activities:
Borrowings on long-term debt		150,000			—			—			—			150,000
Borrowings on revolving credit facility		8,000			—			—			—			8,000
Principal payments on revolving credit facility		(8,000	)		—			—			—			(8,000	)
Principal payments on long-term debt		(1,875	)		—			—			—			(1,875	)
Repayment of long-term debt		(52,500	)		—			—			—			(52,500	)
Payment of debt issuance costs		(4,307	)		—			—			—			(4,307	)
Payment of premium on note redemption		(6,759	)		—			—			—			(6,759	)
Common stock withheld for minimum statutory taxes, net		(1,062	)		—			—			—			(1,062	)
Excess tax benefit from equity awards		1,211			—			—			—			1,211
Cash (used in) provided by intercompany activity		(80,371	)		78,746			1,625			—			—
Net cash provided by (used in) financing activities		4,337			78,746			1,625			—			84,708
Net (decrease) increase in cash and cash equivalents		—			(43,186	)		1,186			—			(42,000	)
Cash and cash equivalents at beginning of the period		—			49,307			92			—			49,399
Cash and cash equivalents at end of the period	$	—		$	6,121		$	1,278		$	—		$	7,399

24

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

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include any statements that address future results or occurrences. In some cases you can identify forward-looking statements by terminology such as “may,” “might,” “will,” “would,” “should,” “could” or the negative thereof. Generally, the words “anticipate,” “believe,” “continue,” “expect,” “intend,” “estimate,” “project,” “plan” and similar expressions identify forward-looking statements. In particular, statements about our expectations, beliefs, plans, objectives, assumptions or future events or performance contained are forward-looking statements.

We have based these forward-looking statements on our current expectations, assumptions, estimates and projections. While we believe these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks, uncertainties and other factors, many of which are outside of our control, which could cause our actual results, performance or achievements to differ materially from any results, performance or achievements expressed or implied by such forward-looking statements. These risks, uncertainties and other factors include, but are not limited to:

• our significant indebtedness, our ability to meet our debt obligations, and our ability to incur substantially more debt;

• difficulties in successfully integrating the operations of acquired facilities, including those acquired in the Partnerships in Care acquisition, or realizing the potential benefits and synergies of these acquisitions;

• our ability to implement our business strategies in the United Kingdom and adapt to the regulatory and business environment in the United Kingdom;

• the impact of payments received from the government and third-party payors on our revenues and results of operations including the significant dependence of the Partnerships in Care facilities on payments received from the National Health Service in the United Kingdom;

• the occurrence of patient incidents, which could result in incremental regulatory burdens, governmental investigations, negative publicity and adversely affect the trading price of our securities;

• our future cash flow and earnings;

• our restrictive covenants, which may restrict our business and financing activities;

• our ability to make payments on our financing arrangements;

• the impact of the economic and employment conditions in the United States and the United Kingdom on our business and future results of operations;

• compliance with laws and government regulations;

• the impact of claims brought against our facilities;

• the impact of governmental investigations, regulatory actions and whistleblower lawsuits;

• the impact of healthcare reform in the United States and abroad;

• the impact of our highly competitive industry on patient volumes;

• our ability to recruit and retain quality psychiatrists and other physicians;

• the impact of competition for staffing on our labor costs and profitability;

• our dependence on key management personnel, key executives and local facility management personnel;

• our acquisition strategy, which exposes us to a variety of operational and financial risks, as well as legal and regulatory risks (e.g., exposure to the new regulatory regimes such as the United Kingdom for Partnerships in Care);

• the impact of state efforts to regulate the construction or expansion of healthcare facilities (including those from Partnerships in Care) on our ability to operate and expand our operations;

• our potential inability to extend leases at expiration;

• the impact of controls designed to reduce inpatient services on our revenues;

• the impact of different interpretations of accounting principles on our results of operations or financial condition;

• the impact of environmental, health and safety laws and regulations, especially in states where we have concentrated operations;

• the impact of an increase in uninsured and underinsured patients or the deterioration in the collectability of the accounts of such patients on our results of operations;

• the risk of a cyber-security incident and any resulting violation of laws and regulations regarding information privacy or other negative impact;

• the impact of laws and regulations relating to privacy and security of patient health information and standards for electronic transactions;

• the impact of a change in the mix of our earnings, and changes in tax rates and laws generally;

• failure to maintain effective internal control over financial reporting;

• the impact of fluctuations in our operating results, quarter to quarter earnings and other factors on the price of our securities;

• the impact of our equity sponsor’s rights over certain company matters;

• the impact of the trend for insurance companies and managed care organizations to enter into sole source contracts on our ability to obtain patients; and

• those risks and uncertainties described in this Quarterly Report on Form 10-Q and from time to time in our filings with the Securities and Exchange Commission.

25

Given these risks and uncertainties, you are cautioned not to place undue reliance on such forward-looking statements. These risks and uncertainties may cause our actual future results to be materially different than those expressed in our forward-looking statements. These forward-looking statements are made only as of the date of this Quarterly Report on Form 10-Q. We do not undertake and specifically decline any obligation to update any such statements or to publicly announce the results of any revisions to any such statements to reflect future events or developments.

Overview

Our business strategy is to acquire and develop inpatient behavioral healthcare facilities and improve our operating results within our inpatient facilities and our other behavioral healthcare operations. We strive to improve the operating results of our facilities by providing high quality services, expanding referral networks and marketing initiatives while meeting the increased demand for behavioral healthcare services through expansion of our current locations as well as developing new services within existing locations. At June 30, 2014, we operated 52 behavioral healthcare facilities with over 4,400 licensed beds in 24 states and Puerto Rico. During the six months ended June 30, 2014, we acquired one facility and added 228 new beds to our existing facilities. We expect to add over 300 total beds for the year ending December 31, 2014 (exclusive of acquisitions).

We are the leading publicly traded pure-play provider of inpatient behavioral healthcare services based upon number of licensed beds in the United States. Management believes that the Company’s recent acquisitions described below position the Company as a leading platform in a highly fragmented industry under the direction of an experienced management team that has significant industry expertise. Management expects to take advantage of several strategies that are more accessible as a result of our increased size and geographic scale, including continuing a national marketing strategy to attract new patients and referral sources, increasing our volume of out-of-state referrals, providing a broader range of services to new and existing patients and clients and selectively pursuing opportunities to expand our facility and bed count.

Acquisitions

On July 1, 2014, we completed the acquisition of Partnerships in Care for net cash consideration of $662.0 million, which is net of cash acquired of $12.0 million and the gain on settlement of the foreign currency derivatives of $15.3 million. The Company used $300.0 million of proceeds from the offering of the 5.125% Senior Notes completed on July 1, 2014, $374.3 million of proceeds from the June 2014 sale of Acadia common stock and borrowings under the Company’s Amended and Restated Senior Secured Credit Facility to fund the acquisition. Partnerships in Care is the second largest independent provider of inpatient behavioral healthcare services in the United Kingdom, operating 23 inpatient behavioral healthcare facilities with over 1,200 beds.

On January 1, 2014, we completed the acquisition of the assets of Pacific Grove, an inpatient psychiatric facility with 68 licensed beds located in Riverside, California, for cash consideration of $10.5 million.

Revenue

Our revenue is primarily derived from services rendered to patients for inpatient psychiatric and substance abuse care, outpatient psychiatric care and adolescent residential treatment. We receive payments from the following sources for services rendered in our facilities: (i) state governments under their respective Medicaid and other programs; (ii) commercial insurers; (iii) the federal government under the Medicare program administered by CMS; and (iv) individual patients and clients. Revenue is recorded in the period in which services are provided at established billing rates less contractual adjustments based on amounts reimbursable by Medicare or Medicaid under provisions of cost or prospective reimbursement formulas or amounts due from other third-party payors at contractually determined rates. Following the acquisition of Partnerships in Care on July 1, 2014, our revenue will also be derived from the National Health Service in the United Kingdom.

26

The following table presents revenue by payor type and as a percentage of revenue before provision for doubtful accounts for the three and six months ended June 30, 2014 and 2013 (in thousands):

	Three Months Ended June 30,												Six Months Ended June 30,
	2014						2013						2014						2013
	Amount			%			Amount			%			Amount			%			Amount			%
Self-Pay	$	6,207			2.8	%	$	4,766			2.6	%	$	13,214			3.1	%	$	8,450			2.4	%
Commercial		58,429			26.5	%		46,019			25.2	%		114,614			26.8	%		88,394			25.4	%
Medicare		48,581			22.0	%		38,854			21.2	%		94,267			22.1	%		71,301			20.5	%
Medicaid		101,546			46.0	%		89,197			48.8	%		193,316			45.3	%		172,390			49.4	%
Other		5,901			2.7	%		4,115			2.2	%		11,372			2.7	%		8,121			2.3	%
Revenue before provision for doubtful accounts		220,664			100.0	%		182,951			100.0	%		426,783			100.0	%		348,656			100.0	%
Provision for doubtful accounts		(6,861	)					(5,457	)					(11,562	)					(9,949	)
Revenue	$	213,803					$	177,494					$	415,221					$	338,707

The following tables present a summary of our aging of accounts receivable as of June 30, 2014 and December 31, 2013:

June 30, 2014

	Current			30-90			90-150			>150			Total
Self-Pay		1.0	%		2.3	%		2.5	%		5.0	%		10.8	%
Commercial		15.1	%		6.2	%		3.1	%		3.3	%		27.7	%
Medicare		16.9	%		4.5	%		1.8	%		3.3	%		26.5	%
Medicaid		24.6	%		5.4	%		2.1	%		2.9	%		35.0	%
Total		57.6	%		18.4	%		9.5	%		14.5	%		100.0	%

December 31, 2013

	Current			30-90			90-150			>150			Total
Self-Pay		2.4	%		2.5	%		2.6	%		4.8	%		12.3	%
Commercial		14.7	%		7.0	%		2.6	%		2.6	%		26.9	%
Medicare		18.1	%		5.1	%		2.1	%		4.0	%		29.3	%
Medicaid		21.3	%		5.6	%		2.1	%		2.5	%		31.5	%
Total		56.5	%		20.2	%		9.4	%		13.9	%		100.0	%

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Results of Operations

The following table illustrates our consolidated results of operations from continuing operations for the respective periods shown (dollars in thousands):

	Three Months Ended June 30,												Six Months Ended June 30,
	2014						2013						2014						2013
	Amount			%			Amount			%			Amount			%			Amount			%
Revenue before provision for doubtful accounts	$	220,664					$	182,951					$	426,783					$	348,656
Provision for doubtful accounts		(6,861	)					(5,457	)					(11,562	)					(9,949	)
Revenue		213,803			100.0	%		177,494			100.0	%		415,221			100.0	%		338,707			100.0	%
Salaries, wages and benefits		122,473			57.3	%		100,764			56.8	%		240,048			57.8	%		195,115			57.6	%
Professional fees		10,891			5.1	%		9,324			5.3	%		21,273			5.1	%		18,338			5.4	%
Supplies		10,596			5.0	%		9,613			5.4	%		20,660			5.0	%		18,211			5.4	%
Rents and leases		2,889			1.3	%		2,394			1.3	%		5,658			1.4	%		4,721			1.4	%
Other operating expenses		24,646			11.5	%		20,096			11.3	%		47,756			11.5	%		37,079			10.9	%
Depreciation and amortization		5,935			2.8	%		4,212			2.4	%		11,371			2.7	%		7,834			2.3	%
Interest expense		9,730			4.5	%		9,445			5.3	%		19,437			4.7	%		18,207			5.4	%
Gain on foreign currency derivatives		(13,735	)		(6.4	)%		—			—			(13,735	)		(3.3	)%		—			—
Debt extinguishment costs		—			—			—			—			—			—	%		9,350			2.8
Transaction-related expenses		3,016			1.4	%		1,355			0.8	%		4,595			1.1	%		2,829			0.8	%
Total expenses		176,441			82.5	%		157,203			88.6	%		357,063			86.0	%		311,684			92.0	%
Income from continuing operations before income taxes		37,362			17.5	%		20,291			11.4	%		58,158			14.0	%		27,023			8.0	%
Provision for income taxes		14,905			7.0	%		8,020			4.5	%		22,680			5.5	%		10,698			3.2	%
Income from continuing operations	$	22,457			10.5	%	$	12,271			6.9	%	$	35,478			8.5	%	$	16,325			4.8	%

Three months ended June 30, 2014 compared to the three months ended June 30, 2013

Revenue before provision for doubtful accounts. Revenue before provision for doubtful accounts increased $37.7 million, or 20.6%, to $220.7 million for the three months ended June 30, 2014 from $183.0 million for the three months ended June 30, 2013. The increase related primarily to revenue generated during the three months ended June 30, 2014 from the facilities acquired in our 2013 and 2014 Acquisitions. Same-facility revenue before provision for doubtful accounts increased by $20.8 million, or 11.4%, for the three months ended June 30, 2014 compared to the three months ended June 30, 2013, resulting from same-facility growth in patient days of 10.6% and same-facility revenue per day of 0.8%. Consistent with the same-facility patient day growth in 2013, the growth in same-facility patient days for the three months ended June 30, 2014 compared to the three months ended June 30, 2013 resulted from the addition of beds to our existing facilities and ongoing demand for our services.

Provision for doubtful accounts. The provision for doubtful accounts was $6.9 million for the three months ended June 30, 2014, or 3.1% of revenue before provision for doubtful accounts, compared to $5.5 million for the three months ended June 30, 2013, or 3.0% of revenue before provision for doubtful accounts. The same-facility provision for doubtful accounts was $6.1 million for the three months ended June 30, 2014, or 3.0% of revenue before provision for doubtful accounts, compared to $5.5 million for the three months ended June 30, 2013, or 3.0% of revenue before provision for doubtful accounts.

Salaries, wages and benefits. Salaries, wages and benefits (“SWB”) expense was $122.5 million for the three months ended June 30, 2014 compared to $100.8 million for the three months ended June 30, 2013, an increase of $21.7 million. SWB expense included $2.4 million and $1.8 million of equity-based compensation expense for the three months ended June 30, 2014 and 2013, respectively. Excluding equity-based compensation expense, SWB expense was $120.1 million, or 56.2% of revenue, for the three months ended June 30, 2014, compared to $99.0 million, or 55.7% of revenue, for the three months ended June 30, 2013. The $21.1 million increase in SWB expense, excluding equity-based compensation expense, was primarily attributable to SWB expense incurred by the facilities acquired in our 2013 and 2014 Acquisitions. Same-facility SWB expense was $102.9 million for the three months ended June 30, 2014, or 52.3% of revenue, compared to $93.7 million for the three months ended June 30, 2013, or 53.0% of revenue.

Professional fees. Professional fees were $10.9 million for the three months ended June 30, 2014, or 5.1% of revenue, compared to $9.3 million for the three months ended June 30, 2013, or 5.3% of revenue. The $1.6 million increase was primarily attributable to professional fees incurred by the facilities acquired in our 2013 and 2014 Acquisitions. Same-facility professional fees were $8.6 million for the three months ended June 30, 2014, or 4.4% of revenue, compared to $7.7 million, for the three months ended June 30, 2013, or 4.4% of revenue.

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Supplies. Supplies expense was $10.6 million for the three months ended June 30, 2014, or 5.0% of revenue, compared to $9.6 million for the three months ended June 30, 2013, or 5.4% of revenue. The $1.0 million increase was primarily attributable to supplies expense incurred by the facilities acquired in our 2013 and 2014 Acquisitions. Same-facility supplies expense was $9.7 million for the three months ended June 30, 2014, or 4.9% of revenue, compared to $9.6 million for the three months ended June 30, 2013, or 5.4% of revenue.

Rents and leases. Rents and leases were $2.9 million for the three months ended June 30, 2014, or 1.3% of revenue, compared to $2.4 million for the three months ended June 30, 2013, or 1.3% of revenue. The $0.5 million increase was primarily attributable to rents and leases incurred by the facilities acquired in our 2013 and 2014 Acquisitions. Same-facility rents and leases were $2.6 million for the three months ended June 30, 2014, or 1.3% of revenue, compared to $2.3 million for the three months ended June 30, 2013, or 1.3% of revenue.

Other operating expenses. Other operating expenses consisted primarily of purchased services, utilities, insurance, travel and repairs and maintenance expenses. Other operating expenses were $24.6 million for the three months ended June 30, 2014, or 11.5% of revenue, compared to $20.1 million for the three months ended June 30, 2013, or 11.3% of revenue. The $4.5 million increase was primarily attributable to other operating expenses incurred by the facilities acquired in our 2013 and 2014 Acquisitions. Same-facility other operating expenses were $21.4 million for the three months ended June 30, 2014, or 10.9% of revenue, compared to $19.6 million for the three months ended June 30, 2013, or 11.1% of revenue.

Depreciation and amortization. Depreciation and amortization expense was $5.9 million for the three months ended June 30, 2014, or 2.8% of revenue, compared to $4.2 million for the three months ended June 30, 2013, or 2.4% of revenue. The increase in depreciation and amortization was attributable to depreciation associated with capital expenditures during 2013 and 2014 and real estate acquired as part of the 2013 and 2014 Acquisitions.

Interest expense. Interest expense was $9.7 million for the three months ended June 30, 2014 compared to $9.4 million for the three months ended June 30, 2013. The increase in interest expense was primarily a result of the issuance of the 6.125% Senior Notes offset by a reduction related to the redemption of $52.5 million in principal amount of the 12.875% Senior Notes on March 12, 2013.

Gain on foreign currency derivatives. In connection with the acquisition of Partnerships in Care, the Company entered into foreign currency forward contracts in June 2014 in order to fix the exchange rate applicable to the payment of the purchase price on July 1, 2014. Favorable exchange rate changes resulted in an increase in the fair value of the forward contracts and a gain on foreign currency derivatives of $13.7 million for the three months ended June 30, 2014.

Transaction-related expenses. Transaction-related expenses were $3.0 million for the three months ended June 30, 2014 compared to $1.4 million for the three months ended June 30, 2013. Transaction-related expenses represent costs incurred in the respective periods, primarily related to the 2013 and 2014 Acquisitions and the Company’s acquisition of Partnerships in Care on July 1, 2014, as summarized below (in thousands):

	Three Months Ended June 30,
	2014		2013
Legal, accounting and other costs	$	3,016	$	798
Severance and contract termination costs		—		557
	$	3,016	$	1,355

Provision for income taxes. For the three months ended June 30, 2014, the provision for income taxes was $14.9 million, reflecting an effective tax rate of 39.9%, compared to $8.0 million, reflecting an effective tax rate of 39.5%, for 2013. The increase in the tax rate for the three months ended June 30, 2014 was primarily attributable to non-deductible transaction-related expenses associated with acquisition of Partnerships in Care on July 1, 2014.

Six months ended June 30, 2014 compared to the six months ended June 30, 2013

Revenue before provision for doubtful accounts. Revenue before provision for doubtful accounts increased $78.1 million, or 22.4%, to $426.8 million for the six months ended June 30, 2014 from $348.7 million for the six months ended June 30, 2013. The increase related primarily to revenue generated during the six months ended June 30, 2014 from the facilities acquired in our 2013 and 2014 Acquisitions. Same-facility revenue before provision for doubtful accounts increased by $36.3 million, or 10.5%, for the six

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months ended June 30, 2014 compared to the six months ended June 30, 2013, resulting from same-facility growth in patient days of 9.1% and same-facility revenue per day of 1.5%. Consistent with the same-facility patient day growth in 2013, the growth in same-facility patient days for the six months ended June 30, 2014 compared to the six months ended June 30, 2013 resulted from the addition of beds to our existing facilities and ongoing demand for our services.

Provision for doubtful accounts. The provision for doubtful accounts was $11.6 million for the six months ended June 30, 2014, or 2.7% of revenue before provision for doubtful accounts, compared to $9.9 million for the six months ended June 30, 2013, or 2.9% of revenue before provision for doubtful accounts. The decrease as a percentage of revenue related primarily to improved collection experience due to enhancements in our business office operations. The same-facility provision for doubtful accounts was $10.2 million for the six months ended June 30, 2014, or 2.7% of revenue before provision for doubtful accounts, compared to $9.9 million for the six months ended June 30, 2013, or 2.9% of revenue before provision for doubtful accounts.

Salaries, wages and benefits. SWB expense was $240.0 million for the six months ended June 30, 2014 compared to $195.1 million for the six months ended June 30, 2013, an increase of $44.9 million. SWB expense included $4.2 million and $2.4 million of equity-based compensation expense for the six months ended June 30, 2014 and 2013, respectively. Excluding equity-based compensation expense, SWB expense was $235.8 million, or 56.8% of revenue, for the six months ended June 30, 2014, compared to $192.7 million, or 56.9% of revenue, for the six months ended June 30, 2013. The $43.1 million increase in SWB expense, excluding equity-based compensation expense, was primarily attributable to SWB expense incurred by the facilities acquired in our 2013 and 2014 Acquisitions. Same-facility SWB expense was $196.9 million for the six months ended June 30, 2014, or 52.7% of revenue, compared to $182.4 million for the six months ended June 30, 2013, or 54.1% of revenue.

Professional fees. Professional fees were $21.3 million for the six months ended June 30, 2014, or 5.1% of revenue, compared to $18.3 million for the six months ended June 30, 2013, or 5.4% of revenue. The $3.0 million increase was primarily attributable to professional fees incurred by the facilities acquired in our 2013 and 2014 Acquisitions. Same-facility professional fees were $15.5 million for the six months ended June 30, 2014, or 4.1% of revenue, compared to $15.2 million, for the six months ended June 30, 2013, or 4.5% of revenue.

Supplies. Supplies expense was $20.7 million for the six months ended June 30, 2014, or 5.0% of revenue, compared to $18.2 million for the six months ended June 30, 2013, or 5.4% of revenue. The $2.5 million increase was primarily attributable to supplies expense incurred by the facilities acquired in our 2013 and 2014 Acquisitions. Same-facility supplies expense was $18.0 million for the six months ended June 30, 2014, or 4.8% of revenue, compared to $18.1 million for the six months ended June 30, 2013, or 5.4% of revenue.

Rents and leases. Rents and leases were $5.7 million for the six months ended June 30, 2014, or 1.4% of revenue, compared to $4.7 million for the six months ended June 30, 2013, or 1.4% of revenue. The $1.0 million increase was primarily attributable to rents and leases incurred by the facilities acquired in our 2013 and 2014 Acquisitions. Same-facility rents and leases were $5.0 million for the six months ended June 30, 2014, or 1.3% of revenue, compared to $4.6 million for the six months ended June 30, 2013, or 1.4% of revenue.

Other operating expenses. Other operating expenses consisted primarily of purchased services, utilities, insurance, travel and repairs and maintenance expenses. Other operating expenses were $47.8 million for the six months ended June 30, 2014, or 11.5% of revenue, compared to $37.1 million for the six months ended June 30, 2013, or 10.9% of revenue. The increase in other operating expenses as a percentage of revenue was primarily attributable to higher other operating expenses incurred by the facilities acquired in our 2013 and 2014 Acquisitions, which had higher other operating expenses as a percentage of revenue than our facilities acquired prior to 2013. Same-facility other operating expenses were $40.3 million for the six months ended June 30, 2014, or 10.8% of revenue, compared to $36.2 million for the six months ended June 30, 2013, or 10.7% of revenue.

Depreciation and amortization. Depreciation and amortization expense was $11.4 million for the six months ended June 30, 2014, or 2.7% of revenue, compared to $7.8 million for the six months ended June 30, 2013, or 2.3% of revenue. The increase in depreciation and amortization was attributable to depreciation associated with capital expenditures during 2013 and 2014 and real estate acquired as part of the 2013 and 2014 Acquisitions.

Interest expense. Interest expense was $19.4 million for the six months ended June 30, 2014 compared to $18.2 million for the six months ended June 30, 2013. The increase in interest expense was primarily a result of the issuance of the 6.125% Senior Notes offset by a reduction related to the redemption of $52.5 million in principal amount of the 12.875% Senior Notes on March 12, 2013.

Gain on foreign currency derivatives. In connection with the acquisition of Partnerships in Care, the Company entered into foreign currency forward contracts in June 2014 in order to fix the exchange rate applicable to the payment of the purchase price on July 1, 2014. Favorable exchange rate changes resulted in an increase in the fair value of the forward contracts and a gain on foreign currency derivatives of $13.7 million for the six months ended June 30, 2014.

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Debt extinguishment costs. Debt extinguishment costs for the six months ended June 30, 2013 represent $6.8 million of cash charges and $2.6 million of noncash charges recorded in connection with the redemption of $52.5 million in principal amount of the 12.875% Senior Notes on March 12, 2013.

Transaction-related expenses. Transaction-related expenses were $4.6 million for the six months ended June 30, 2014 compared to $2.8 million for the six months ended June 30, 2013. Transaction-related expenses represent costs incurred in the respective periods, primarily related to the 2013 and 2014 Acquisitions and the Company’s acquisition of Partnerships in Care on July 1, 2014, as summarized below (in thousands):

	Six Months Ended June 30,
	2014		2013
Legal, accounting and other costs	$	4,136	$	1,803
Severance and contract termination costs		459		1,026
	$	4,595	$	2,829

Provision for income taxes. For the six months ended June 30, 2014, the provision for income taxes was $22.7 million, reflecting an effective tax rate of 39.0%, compared to $10.7 million, reflecting an effective tax rate of 39.6%, for 2013. The decrease in the tax rate for the six months ended June 30, 2014 was primarily attributable to various state tax planning initiatives and restructurings partially offset by non-deductible transaction-related expenses associated with acquisition of Partnerships in Care on July 1, 2014.

Liquidity and Capital Resources

Cash provided by continuing operating activities for the six months ended June 30, 2014 was $29.3 million compared to $29.6 million for the six months ended June 30, 2013. Days sales outstanding as of June 30, 2014 was 47 compared to 46 as of December 31, 2013. As of June 30, 2014 and December 31, 2013, we had working capital of $346.9 million and $30.4 million, respectively.

Cash used in investing activities for the six months ended June 30, 2014 was $72.1 million compared to $156.0 million for the six months ended June 30, 2013. Cash used in investing activities for the six months ended June 30, 2014 primarily consisted of $10.0 million of cash paid for acquisitions. Cash paid for capital expenditures for the six months ended June 30, 2014 was $43.3 million, consisting of $9.7 million of routine capital expenditures and $33.6 million of expansion capital expenditures. We define expansion capital expenditures as those that increase the capacity of our facilities or otherwise enhance revenue. Routine or maintenance capital expenditures were 2.3% of revenue for the six months ended June 30, 2014. Cash paid for real estate acquisitions was $18.3 million for the six months ended June 30, 2014. Cash used in investing activities for the six months ended June 30, 2013 consisted primarily of cash paid for acquisitions of $121.7 million, cash paid for capital expenditures of $29.7 million and cash paid for real estate acquisitions of $4.0 million.

Cash provided by financing activities for the six months ended June 30, 2014 was $316.0 million compared to $84.7 million for the six months ended June 30, 2013. Cash provided by financing activities for the six months ended June 30, 2014 primarily consisted of the $374.3 million of proceeds from our issuance of common stock, borrowings on revolving credit facility of $59.5 million, borrowings on long-term debt of $7.5 million and an excess tax benefit from equity awards of $3.5 million, partially offset by principal payments on our revolving credit facility of $113.0 million, payment of debt issuance costs of $5.8 million, principal payments on long-term debt of $3.8 million, cash paid as contingent consideration for an acquisition based upon earnings of Park Royal and common stock withheld for minimum statutory taxes of $3.0 million. Cash provided by financing activities for the six months ended June 30, 2013 primarily consisted of long-term debt borrowings of $150.0 million in connection with the issuance of the 6.125% Senior Notes, borrowings on revolving credit facility of $8.0 million and an excess tax benefit from equity awards of $1.2 million, partially offset by repayment of long-term debt of $52.5 million, principal payments on revolving credit facility of $8.0 million, payment of premium on note redemption of $6.8 million, payment of debt issuance costs of $4.3 million, principal payments on long-term debt of $1.9 million and common stock withheld for minimum statutory taxes of $1.1 million.

Amended and Restated Senior Credit Facility

We entered into the Senior Secured Credit Facility on April 1, 2011. On December 31, 2012, the Company entered into the Amended and Restated Credit Agreement which amended and restated the Senior Secured Credit Facility.

On February 13, 2014, we entered into the Fourth Amendment to the Amended and Restated Credit Agreement, to increase the size of the Amended and Restated Senior Credit Facility and extend the maturity date thereof, which resulted in the Company having a revolving line of credit of up to $300.0 million and term loans of $300.0 million. The Fourth Amendment also reduced the interest

31

rates applicable to the Amended and Restated Senior Credit Facility and provided increased flexibility to the Company in terms of the financial and other restrictive covenants. The Fourth Amendment also provides for a $150.0 million incremental credit facility, with the potential for unlimited additional incremental amounts, provided the Company meets certain financial ratios, in each case subject to customary conditions precedent to borrowing.

On June 16, 2014, we entered into the Fifth Amendment to the Amended and Restated Senior Credit Facility. The Fifth Amendment specifically permitted the acquisition of Partnerships in Care, gave us the ability to incur a tranche of term loan B debt in the future through its incremental credit facility, and modified certain of the restrictive covenants on miscellaneous investments and incurrence of miscellaneous liens. The restrictive covenants on investments in joint ventures and foreign subsidiaries were also amended such that we may now invest, in any given fiscal year, up to five percent (5%) of our total assets in both joint ventures and foreign subsidiaries, respectively; provided that the aggregate amount of investments in both joint ventures and foreign subsidiaries, respectively, may not exceed ten percent (10%) of its total assets over the life of the Amended and Restated Senior Credit Facility; provided further that the aggregate amount of investments made in both joint ventures and foreign subsidiaries collectively pursuant to the foregoing may not exceed fifteen percent (15%) of our total assets. Finally, the Fifth Amendment provided increased flexibility to the Company in terms of our financial covenants, as described in the charts below.

The Company had $299.6 million of availability under the revolving line of credit as of June 30, 2014, of which $125.0 million was borrowed on July 1, 2014 in connection with the Partnerships in Care acquisition. Borrowings under the revolving line of credit are subject to customary conditions precedent to borrowing. The term loans require quarterly principal payments of $1.9 million for June 30, 2014 to December 31, 2014, $3.8 million for March 31, 2015 to December 31, 2015, $5.6 million for March 31, 2016 to December 31, 2016, $7.5 million for March 31, 2017 to December 31, 2017, and $9.4 million for March 31, 2018 to December 31, 2018, with the remaining principal balance due on the maturity date of February 13, 2019.

As amended by the Fifth Amendment, the Amended and Restated Credit Agreement requires the Company and its subsidiaries to comply with customary affirmative, negative and financial covenants. A breach of any of the restrictions or covenants in our debt agreements could cause a cross-default under other debt agreements. We may be required to pay all of our indebtedness immediately if we default on any of the numerous financial or other restrictive covenants contained in any of our material debt agreements. Set forth below is a brief description of such covenants, all of which are subject to customary exceptions, materiality thresholds and qualifications:

a) the affirmative covenants include the following: (i) delivery of financial statements and other customary financial information; (ii) notices of events of default and other material events; (iii) maintenance of existence, ability to conduct business, properties, insurance and books and records; (iv) payment of taxes; (v) lender inspection rights; (vi) compliance with laws; (vii) use of proceeds; (viii) further assurances; and (ix) additional collateral and guarantor requirements.

b) the negative covenants include limitations on the following: (i) liens; (ii) debt (including guaranties); (iii) investments; (iv) fundamental changes (including mergers, consolidations and liquidations); (v) dispositions; (vi) sale leasebacks; (vii) affiliate transactions; (viii) burdensome agreements; (ix) restricted payments; (x) use of proceeds; (xi) ownership of subsidiaries; (xii) changes to line of business; (xiii) changes to organizational documents, legal name, state of formation, form of entity and fiscal year; (xiv) prepayment or redemption of certain senior unsecured debt; and (xv) amendments to certain material agreements. The Company is generally not permitted to issue dividends or distributions other than with respect to the following: (w) certain tax distributions; (x) the repurchase of equity held by employees, officers or directors upon the occurrence of death, disability or termination subject to cap of $500,000 in any fiscal year and compliance with certain other conditions; (y) in the form of capital stock; and (z) scheduled payments of deferred purchase price, working capital adjustments and similar payments pursuant to the merger agreement or any permitted acquisition.

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c) The financial covenants include maintenance of the following:

• the fixed charge coverage ratio may not be less than 1.25:1.00 as of the end of any fiscal quarter;

• the consolidated leverage ratio may not be greater than (i) if the Bridge Senior Unsecured Indebtedness (as defined in the Amended and Restated Senior Credit Facility) is not incurred, the ratio set forth in Column A and (ii) if the Bridge Senior Unsecured Indebtedness is incurred, the ratio set forth in Column B::

Fiscal Quarter Ending	Maximum Consolidated Leverage Ratio (1)
	Column A		Column B
June 30, 2014		5.75:1.0		7.25:1.0
September 30, 2014		5.75:1.0		7.25:1.0
December 31, 2014		5.50:1.0		6.50:1.0
March 31, 2015		5.50:1.0		6.50:1.0
June 30, 2015		5.50:1.0		6.50:1.0
September 30, 2015		5.50:1.0		6.50:1.0
December 31, 2015		5.25:1.0		5.75:1.0
March 31, 2016		5.25:1.0		5.75:1.0
June 30, 2016		5.25:1.0		5.75:1.0
September 30, 2016		5.25:1.0		5.75:1.0
December 31, 2016		5.00:1.0		5.00:1.0
March 31, 2017		5.00:1.0		5.00:1.0
June 30, 2017		5.00:1.0		5.00:1.0
September 30, 2017		5.00:1.0		5.00:1.0
December 31, 2017 and each fiscal quarter ending thereafter		4.50:1.0		4.50:1.0

(1) The Company did not incur any Bridge Senior Unsecured Indebtedness.

• The consolidated senior secured leverage ratio may not be greater than the amount set forth below as of the date opposite such ratio:

Fiscal Quarter Ending	Maximum Consolidated Senior Secured Leverage Ratio
June 30, 2014		3.75:1.0
September 30, 2014		3.75:1.0
December 31, 2014		3.75:1.0
March 31, 2015 and each fiscal quarter ending thereafter		3.50:1.0

As of June 30, 2014, the Company was in compliance with all of the above covenants.

The interest rates and the unused line fee on unused commitments related to the Amended and Restated Senior Credit Facility are based upon the following pricing tiers:

Pricing Tier	Consolidated Leverage Ratio	LIBOR Rate Loans			Base Rate Loans			Unused Line Fee
1	<3.5:1.0		2.25	%		1.25	%		0.30	%
2	³3.5:1.0 but <4.0:1.0		2.50	%		1.50	%		0.35	%
3	³4.0:1.0 but <4.5:1.0		2.75	%		1.75	%		0.40	%
4	³4.50:1.0 but <5.25:1.0		3.00	%		2.00	%		0.45	%
5	³5.25:1.0		3.25	%		2.25	%		0.50	%

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Borrowings under the Amended and Restated Senior Credit Facility are guaranteed by each of the Company’s wholly-owned domestic subsidiaries (other than Park Royal and certain other excluded subsidiaries) and are secured by a lien on substantially all of the assets of the Company and such subsidiaries. Borrowings under the Amended and Restated Senior Credit Facility bear interest at a rate tied to Acadia’s Consolidated Leverage Ratio (defined as consolidated funded debt net of up to $20,000,000 of unrestricted and unencumbered cash to consolidated EBITDA, in each case as defined in the Amended and Restated Credit Agreement). The Applicable Rate (as defined in the Amended and Restated Credit Agreement) for borrowings under the Amended and Restated Senior Credit Facility was 2.75% for Eurodollar Rate Loans (as defined in the Amended and Restated Credit Agreement) and 1.75% for Base Rate Loans (as defined in the Amended and Restated Credit Agreement) at June 30, 2014. Eurodollar Rate Loans bear interest at the Applicable Rate plus the Eurodollar Rate (as defined in the Amended and Restated Credit Agreement) (based upon the LIBOR Rate (as defined in the Amended and Restated Credit Agreement) prior to commencement of the interest rate period). Base Rate Loans bear interest at the Applicable Rate plus the highest of (i) the federal funds rate plus 0.50%, (ii) the prime rate and (iii) the Eurodollar Rate plus 1.0%. As of June 30, 2014, borrowings under the Senior Secured Credit Facility bore interest at a rate of LIBOR plus 2.75%. In addition, we are required to pay a commitment fee on undrawn amounts under the revolving line of credit. We paid a commitment fee of 0.50% for undrawn amounts for the period from January 1, 2013 through February 12, 2014 and 0.40% for undrawn amounts for the period from February 13, 2014 through June 30, 2014. The Amended and Restated Senior Credit Facility matures on February 13, 2019.

12.875% Senior Notes due 2018

On November 1, 2011, we issued $150.0 million of 12.875% Senior Notes due 2018 at 98.323% of the aggregate principal amount of $150.0 million, a discount of $2.5 million. The notes bear interest at a rate of 12.875% per annum. We pay interest on the notes semi-annually, in arrears, on November 1 and May 1 of each year.

The indenture governing the 12.875% Senior Notes contains covenants that, among other things, limit our ability and the ability of our restricted subsidiaries to: (i) pay dividends, redeem stock or make other distributions or investments; (ii) incur additional debt or issue certain preferred stock; (iii) transfer or sell assets; (iv) engage in certain transactions with affiliates; (v) create restrictions on dividends or other payments by the restricted subsidiaries; (vi) merge, consolidate or sell substantially all of the Company’s assets; and (vii) create liens on assets.

The 12.875% Senior Notes issued by the Company are guaranteed by each of the Company’s subsidiaries that guarantee the Company’s obligations under the Amended and Restated Senior Credit Facility. The guarantees are full and unconditional and joint and several.

On March 12, 2013, we redeemed $52.5 million in principal amount of the 12.875% Senior Notes using a portion of the net proceeds of our December 2012 equity offering pursuant to the provision in the indenture permitting an optional redemption with equity proceeds of up to 35% of the principal amount of 12.875% Senior Notes. The 12.875% Senior Notes were redeemed at a redemption price of 112.875% of the principal amount thereof plus accrued and unpaid interest to, but not including, the redemption date in accordance with the provisions of the indenture governing the 12.875% Senior Notes. As part of the redemption of 35% of the 12.875% Senior Notes, the Company recorded a debt extinguishment charge of $9.4 million, including the premium and write-off of deferred financing costs, which was recorded in debt extinguishment costs in the consolidated statements of operations.

6.125% Senior Notes Due 2021

On March 12, 2013, we issued $150.0 million of 6.125% Senior Notes due 2021. The 6.125% Senior Notes mature on March 15, 2021 and bear interest at a rate of 6.125% per annum, payable semi-annually in arrears on March 15 and September 15 of each year.

The indenture governing the 6.125% Senior Notes contains covenants that, among other things, limit the Company’s ability and the ability of its restricted subsidiaries to: (i) pay dividends, redeem stock or make other distributions or investments; (ii) incur additional debt or issue certain preferred stock; (iii) transfer or sell assets; (iv) engage in certain transactions with affiliates; (v) create restrictions on dividends or other payments by the restricted subsidiaries; (vi) merge, consolidate or sell substantially all of the Company’s assets; and (vii) create liens on assets.

The 6.125% Senior Notes issued by the Company are guaranteed by each of the Company’s subsidiaries that guarantee the Company’s obligations under the Amended and Restated Credit Facility. The guarantees are full and unconditional and joint and several.

We may redeem the 6.125% Senior Notes at our option, in whole or part, at any time prior to March 15, 2016, at a price equal to 100% of the principal amount of the 6.125% Senior Notes redeemed, plus accrued and unpaid interest to the redemption date and plus an applicable premium. We may redeem the 6.125% Senior Notes, in whole or in part, on or after March 15, 2016, at the redemption prices set forth in the indenture governing the 6.125% Senior Notes plus accrued and unpaid interest to the redemption date. At any time on or before March 15, 2016, we may elect to redeem up to 35% of the aggregate principal amount of the 6.125% Senior Notes at a redemption price equal to 106.125% of the principal amount thereof, plus accrued and unpaid interest to the redemption date, with the net proceeds of one or more equity offerings.

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5.125% Senior Notes due 2022

On July 1, 2014, the Company issued $300.0 million of 5.125% Senior Notes due 2022. The 5.125% Senior Notes mature on July 1, 2022 and bear interest at a rate of 5.125% per annum, payable semi-annually in arrears on January 1 and July 1 of each year, beginning on January 1, 2015.

The indenture governing the 5.125% Senior Notes contains covenants that, among other things, limit the Company’s ability and the ability of its restricted subsidiaries to: (i) pay dividends, redeem stock or make other distributions or investments; (ii) incur additional debt or issue certain preferred stock; (iii) transfer or sell assets; (iv) engage in certain transactions with affiliates; (v) create restrictions on dividends or other payments by the restricted subsidiaries; (vi) merge, consolidate or sell substantially all of the Company’s assets and (vii) create liens on assets.

The 5.125% Senior Notes issued by the Company are guaranteed by each of the Company’s subsidiaries that guarantee the Company’s obligations under the Amended and Restated Credit Facility. The guarantees are full and unconditional and joint and several.

We may redeem the 5.125% Senior Notes at its option, in whole or part, at any time prior to July 1, 2017, at a price equal to 100% of the principal amount of the 5.125% Senior Notes redeemed, plus accrued and unpaid interest to the redemption date and plus an applicable premium. We may redeem the 5.125% Senior Notes, in whole or in part, on or after July 1, 2017, at the redemption prices set forth in the indenture governing the 5.125% Senior Notes plus accrued and unpaid interest to the redemption date. At any time on or before July 1, 2017, the Company may elect to redeem up to 35% of the aggregate principal amount of the 5.125% Senior Notes at a redemption price equal to 105.125% of the principal amount thereof, plus accrued and unpaid interest to the redemption date, with the net proceeds of one or more equity offerings.

9.0% and 9.5% Revenue Bonds

On November 11, 2012, in connection with the acquisition of Park Royal, we assumed debt of $23.0 million. The fair market value of the debt assumed was $25.6 million and resulted in a debt premium balance being recorded as of the acquisition date. The debt consisted of $7.5 million and $15.5 million of Lee County (Florida) Industrial Development Authority Healthcare Facilities Revenue Bonds, Series 2010 with stated interest rates of 9.0% and 9.5%, respectively. The 9.0% bonds in the amount of $7.5 million have a maturity date of December 1, 2030 and require yearly principal payments beginning in 2013. The 9.5% bonds in the amount of $15.5 million have a maturity date of December 1, 2040 and require yearly principal payments beginning in 2031. The principal payments establish a bond-sinking fund to be held with the trustee and shall be sufficient to redeem the principal amounts of the 9.0% and 9.5% Revenue Bonds on their respective maturity dates. As of June 30, 2014 and December 31, 2013, $2.3 million was recorded within other assets on the balance sheet related to the debt service reserve fund requirements. The yearly principal payments, which establish a bond sinking fund, will increase the debt service reserve fund requirements. The bond premium amount of $2.6 million is amortized as a reduction of interest expense over the life of the 9.0% and 9.5% Revenue Bonds using the effective interest method.

Contractual Obligations

The following table presents a summary of contractual obligations as of June 30, 2014 (dollars in thousands):

	Payments Due by Period
	Less Than 1 Year		1-3 Years		3-5 Years		More Than 5 Years		Total
Long-term debt (a)	$	44,853	$	107,247	$	305,490	$	316,497	$	774,087
Operating leases		9,867		12,717		7,095		19,224		48,903
Purchase and other obligations (b)		4,030		562		870		—		5,462
Total obligations and commitments	$	58,750	$	120,526	$	313,455	$	335,721	$	828,452

(a) Amounts include required principal and interest payments. The projected interest payments reflect an interest rate of 2.75% per annum for our variable-rate debt based on the rate in place as of June 30, 2014.

(b) Amounts relate to purchase obligations, including capital lease payments and contingent payments of up to $3.8 million related to the acquisition of Park Royal in November 2012 that we may make depending upon achievements of certain financial targets over the four-year period ending December 31, 2016.

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Off-Balance Sheet Arrangements

As of June 30, 2014, we had standby letters of credit outstanding of $0.4 million related to security for the payment of claims as required by our workers’ compensation insurance program.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Our interest expense is sensitive to changes in market interest rates. With respect to our interest-bearing liabilities, our long-term debt outstanding at June 30, 2014 was composed of $271.0 million of fixed-rate debt and $296.3 million of variable-rate debt with interest based on LIBOR plus an applicable margin. A hypothetical 10% increase in interest rates would decrease our net income and cash flows by $0.5 million on an annual basis based upon our borrowing level at June  30, 2014.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this report, our management conducted an evaluation, with the participation of our chief executive officer and chief financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)). Based on this evaluation, our chief executive officer and chief financial officer have concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting during the three months ended June 30, 2014 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

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PART II – OTHER INFORMATION

Item 1. Legal Proceedings

We are, from time to time, subject to various claims and legal actions that arise in the ordinary course of our business, including claims for damages for personal injuries, medical malpractice, breach of contract, tort and employment related claims. In these actions, plaintiffs request a variety of damages, including, in some instances, punitive and other types of damages that may not be covered by insurance. In the opinion of management, we are not currently a party to any proceeding that would have a material adverse effect on our business, financial condition or results of operations.

Item 1A. Risk Factors

Acadia has updated and revised the risk factors previously disclosed in its periodic reports filed with the Securities and Exchange Commission from time to time. In addition to the other information set forth in this report, an investor should carefully consider the factors discussed below. Any of the following risks could materially and adversely affect our business, financial condition or results of operations. These risks should be carefully considered before making an investment decision regarding us. The risks and uncertainties described below are not the only ones we face and there may be additional risks that we are not presently aware of or that we currently consider not likely to have a significant impact. If any of the following risks actually occurred, our business, financial condition and operating results could suffer, and the trading price of our common stock could decline.

Fluctuations in our operating results, quarter to quarter earnings and other factors may result in significant decreases in the price of our securities.

The capital markets experience volatility that is often unrelated to operating performance. These broad market fluctuations may adversely affect the trading price of our securities and, as a result, there may be significant volatility in the market price of our securities. If we are unable to operate our facilities as profitably as we have in the past or as our investors expect us to in the future, the market price of our securities will likely decline when it becomes apparent that the market expectations may not be realized. In addition to our operating results, many economic and seasonal factors outside of our control could have an adverse effect on the price of our securities and increase fluctuations in our quarterly earnings. These factors include certain of the risks discussed herein, demographic changes, operating results of other healthcare companies, changes in our financial estimates or recommendations of securities analysts, speculation in the press or investment community, the possible effects of war, terrorist and other hostilities, adverse weather conditions, the level of seasonal illnesses, managed care contract negotiations and terminations, changes in general conditions in the economy or the financial markets or other developments affecting the healthcare industry.

An incident involving one or more of our patients or the failure by one or more of our facilities to provide appropriate care could result in increased regulatory burdens, governmental investigations, negative publicity and adversely affect the trading price of our securities.

If one or more of our facilities experiences an adverse patient incident or is found to have failed to provide appropriate patient care, an admissions hold or other adverse regulatory action could be taken against us. Any such patient incident or adverse regulatory action could result in governmental investigations, judgments or fines and have a material adverse effect on our business, financial condition and results of operations. In addition, we could receive negative publicity or unfavorable media attention, whether warranted or unwarranted, that could have a significant, adverse effect on the trading price of our securities.

Our revenues and results of operations are significantly affected by payments received from the government and third-party payors.

A significant portion of our revenues are from government healthcare programs, principally Medicare, Medicaid and the National Health Service (“NHS”). For the six months ended June 30, 2014, Acadia derived approximately 67% of its revenues from the Medicare and Medicaid programs, and Partnerships in Care derived approximately 97% of its revenue from NHS.

Changes in these government programs in recent years have resulted in limitations on reimbursement and, in some cases, reduced levels of reimbursement for healthcare services. Payments from federal, state and United Kingdom government healthcare programs are subject to statutory and regulatory changes, administrative rulings, interpretations and determinations, requirements for utilization review, and governmental funding restrictions, all of which could materially increase or decrease program payments, as well as affect the cost of providing service to patients and the timing of payments to facilities. We are unable to predict the effect of recent and future policy changes on our operations. In addition, since most states operate with balanced budgets, and since the Medicaid program is often a state’s largest program, some states can be expected to enact or consider enacting legislation formulated to reduce their Medicaid expenditures. Furthermore, the recent economic downturn has increased the budgetary pressures on the federal government and many state governments, which may negatively affect the availability of taxpayer funds for Medicare and Medicaid programs.

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If the rates paid or the scope of services covered by government payors are reduced, there could be a material adverse effect on our business, financial condition and results of operations.

In addition to changes in government reimbursement programs, our ability to negotiate favorable contracts with private payors, including managed care providers, significantly affects the financial condition and operating results of our facilities in the United States. Management expects third-party payors to aggressively manage reimbursement levels and cost controls. Reductions in reimbursement amounts received from third-party payors could have a material adverse effect on our business, financial condition and results of operations.

Our facilities acquired from Partnerships in Care rely on publicly funded entities in the United Kingdom for approximately 97% of their revenue, and the loss or reduction of such funding or changes to procurement methods could negatively impact occupancy rates which could have a corresponding material adverse effect on our business, results of operations, financial condition or prospects.

Referrals to Partnerships in Care’s services by NHS accounted for approximately 97% of its revenue for the year ended December 31, 2013. There is a risk that budget constraints, public spending cuts (such as the cuts announced by the United Kingdom government in the 2010 Comprehensive Spending Review and implemented in the 2011 and 2012 government budgets) or other financial pressures could cause NHS to reduce funding for the types of services that Partnerships in Care provides. For example, in 2010, NHS announced a period of austerity and reduced spending and outsourcing of medical health treatment, which adversely affected our results from 2010 to 2012 until such austerity was relaxed. In addition, policy changes in the United Kingdom could lead to fewer of such services being purchased by publicly funded entities or material changes being made to their procurement practices, or the in-sourcing of mental health services, any of which could materially reduce the revenue of the Partnerships in Care facilities.

The Partnerships in Care facilities may not achieve fee rate increases or may suffer fee rate decreases, which could have an adverse impact on our business, results of operations, financial condition or prospects.

The majority of fee rates that the facilities acquired from Partnerships in Care decide to set for their services are subject to annual adjustments. NHS has been under budgetary pressure since the announcement by the United Kingdom Government of the Comprehensive Spending Review in 2010 imposing cuts on government spending and have, as such, reduced its spending. This resulted in Partnerships in Care being unable to implement material price increases during the last several years (which has adversely affected its results), and there can be no assurance that we will be able to implement price increases in the future. Furthermore, should the effect of any increase in the annual wages or other operating costs of the Partnerships in Care business exceed the effect of any increase in such facilities’ weekly fee rates (which are the basis of the Partnerships in Care facilities’ revenue), we would have to absorb such costs and this could have a material adverse effect on our business, results of operations, financial condition or prospects.

Our substantial debt could adversely affect our financial health and prevent us from fulfilling our obligations under our financing arrangements.

As of June 30, 2014, we had $567.3 million of total debt, which included $296.3 million of debt under our Amended and Restated Senior Credit Facility, $97.5 million (before a discount of $1.2 million) of debt under our 12.875% Senior Notes, $150.0 million of debt under our 6.125% Senior Notes and $24.7 million (including a premium of $2.0 million) of debt under our 9.0% and 9.5% Revenue Bonds.

Our substantial debt could have important consequences to our business. For example, it could:

• increase our vulnerability to general adverse economic and industry conditions;

• make it more difficult for us to satisfy our other financial obligations;

• restrict us from making strategic acquisitions or cause us to make non-strategic divestitures;

• require us to dedicate a substantial portion of our cash flow from operations to payments on our debt (including scheduled repayments on our outstanding term loan borrowings under the Amended and Restated Senior Credit Facility), thereby reducing the availability of our cash flow to fund working capital, capital expenditures and other general corporate purposes;

• expose us to interest rate fluctuations because the interest on the Amended and Restated Senior Credit Facility is imposed at variable rates;

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• make it more difficult for us to satisfy our obligations to our lenders, resulting in possible defaults on and acceleration of such debt;

• limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;

• place us at a competitive disadvantage compared to our competitors that have less debt;

• limit our ability to borrow additional funds; and

• limit our ability to pay dividends, redeem stock or make other distributions.

In addition, the terms of our financing arrangements contain restrictive covenants that limit our ability to engage in activities that may be in our long-term best interests. Our failure to comply with those covenants could result in an event of default which, if not cured or waived, could result in the acceleration of all of our debts, including the Amended and Restated Senior Credit Facility and the Senior Notes.

Servicing our debt will require a significant amount of cash. Our ability to generate sufficient cash to service our debt depends on many factors beyond our control.

Our ability to make payments on and to refinance our debt, to fund planned capital expenditures and to maintain sufficient working capital will depend on our ability to generate cash in the future. This, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control.

We cannot assure you that our business will generate sufficient cash flow from operations or that future borrowings will be available to us under the Amended and Restated Senior Credit Facility or from other sources in an amount sufficient to enable us to service our debt or to fund our other liquidity needs. If our cash flow and capital resources are insufficient to allow us to make scheduled payments on our debt, we may need to reduce or delay capital expenditures, sell assets, seek additional capital or restructure or refinance all or a portion of our debt on or before the maturity thereof, any of which could have a material adverse effect on our business, financial conditions or results of operations. We cannot assure you that we will be able to refinance any of our debt on commercially reasonable terms or at all, or that the terms of that debt will allow any of the above alternative measures or that these measures would satisfy our scheduled debt service obligations. If we are unable to generate sufficient cash flow to repay or refinance our debt on favorable terms, it could significantly adversely affect our financial condition and the value of our outstanding debt. Our ability to restructure or refinance our debt will depend on the condition of the capital markets and our financial condition. Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations.

We are subject to a number of restrictive covenants, which may restrict our business and financing activities.

Our financing arrangements impose, and the terms of any future debt may impose, operating and other restrictions on us. Such restrictions affect, and in many respects limit or prohibit, among other things, our and our subsidiaries’ ability to:

• incur or guarantee additional debt and issue certain preferred stock;

• pay dividends on our common stock or redeem, repurchase or retire our common stock or subordinated debt;

• transfer or sell our assets:

• make certain payments or investments;

• make capital expenditures;

• create certain liens on assets;

• create restrictions on the ability of our subsidiaries to pay dividends or make other payments to us;

• engage in certain transactions with our affiliates; and

• merge or consolidate with other companies.

The Amended and Restated Senior Credit Facility also requires us to meet certain financial ratios, including a fixed charge coverage ratio and a consolidated leverage ratio.

These restrictions may prevent us from taking actions that management believes would be in the best interests of our business, and may make it difficult for us to successfully execute our business strategy or effectively compete with companies that are not similarly restricted. We also may incur future debt obligations that might subject us to additional restrictive covenants that could affect our financial and operational flexibility. Our ability to comply with these covenants in future periods will largely depend on the pricing of our products and services, our success at implementing cost reduction initiatives and our ability to successfully implement

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our overall business strategy. We cannot assure you that we will be granted waivers or amendments to our financing arrangements if for any reason we are unable to comply with our financial covenants. The breach of any of these covenants and restrictions could result in a default under the indentures governing our outstanding Senior Notes or under the Amended and Restated Senior Credit Facility, which could result in an acceleration of our debt.

Despite our current debt level, we may incur significant additional amounts of debt, which could further exacerbate the risks associated with our substantial debt.

We may incur substantial additional debt, including the issuance of additional notes and other secured debt, in the future. Although the indentures governing our outstanding Senior Notes and our Amended and Restated Senior Credit Facility contain restrictions on the incurrence of additional debt, these restrictions are subject to a number of significant qualifications and exceptions, and under certain circumstances, the amount of debt that could be incurred in compliance with these restrictions could be substantial. If new debt is added to our existing debt levels, the related risks that we now face would intensify and we may not be able to meet all our debt obligations.

If we default on our obligations to pay our indebtedness, we may not be able to make payments on our financing arrangements.

Any default under the agreements governing our indebtedness, including a default under our Amended and Restated Senior Credit Facility and the indentures governing our Senior Notes, and the remedies sought by the holders of such indebtedness, could adversely affect our ability to pay the principal, premium, if any, and interest on the notes and substantially decrease the market value of the notes. If we are unable to generate sufficient cash flows and are otherwise unable to obtain funds necessary to meet required payments of principal, premium, if any, and interest on our indebtedness, or if we otherwise fail to comply with the various covenants, including financial and operating covenants, in the instruments governing our indebtedness (including our Amended and Restated Senior Credit Facility and the indentures governing our Senior Notes), we would be in default under the terms of the agreements governing such indebtedness. In the event of such default, the holders of such indebtedness could elect to declare all the funds borrowed thereunder to be due and payable, the lenders under our Amended and Restated Senior Credit Facility could elect to terminate their commitments or cease making further loans and institute foreclosure proceedings against our assets, or we could be forced to apply all available cash flows to repay such indebtedness, and, in any such case, we could ultimately be forced into bankruptcy or liquidation. Because the Amended and Restated Senior Credit Facility and the indentures governing our Senior Notes have customary cross-default provisions, if any of the indebtedness under our Amended and Restated Senior Credit Facility or our Senior Notes is accelerated, our other indebtedness will be accelerated, making it even more difficult for us to repay or refinance the amounts due.

Expanding our operations internationally poses additional risks to our business.

Prior to the acquisition of Partnerships in Care, we were engaged in business activities in the United States and Puerto Rico. The acquisition of Partnerships in Care marks our first entry into a foreign market. Our business or financial performance may be adversely affected due to the risks of operating internationally, including but not limited to the following: economic and political instability, failure to comply with foreign laws and regulations and adverse changes in the health care policy of the United Kingdom (including decreases in funding for the services provided by Partnerships in Care), adverse changes in law and regulations affecting the operations of Partnerships in Care, difficulties and costs of staffing and managing our new operations in the United Kingdom. If any of these events were to materialize, they could lead to disruption of our business, significant expenditures and/or damages to our reputation, which could have a material adverse effect on our results of operations, financial condition or prospects.

As a company based outside of the United Kingdom, we will need to take certain actions to be more easily accepted in the United Kingdom. For example, we may need to engage in a public relations campaign to emphasize service quality and company philosophy, preserve local management continuity and business practices and be transparent in our dealings with local governments and taxing authorities. Such efforts will require significant time and effort on the part of our management team. Our results of operation could suffer if these efforts are not successful.

Our acquisition strategy exposes us to a variety of operational and financial risks.

A principal element of our business strategy is to grow by acquiring other companies and assets in the behavioral healthcare industry. Growth, especially rapid growth, through acquisitions exposes us to a variety of operational and financial risks. We summarize the most significant of these risks below.

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Integration risks

We must integrate our acquisitions with our existing operations. This process includes the integration of the various components of our business and of the businesses we have acquired or may do so in the future, including the following:

• additional psychiatrists, other physicians and employees who are not familiar with our operations;

• patients who may elect to switch to another behavioral healthcare provider;

• regulatory compliance programs; and

• disparate operating, information and record keeping systems and technology platforms.

Integrating a new facility could be expensive and time consuming and could disrupt our ongoing business, negatively affect cash flow and distract management and other key personnel from day-to-day operations.

We may not be able to combine successfully the operations of recently acquired facilities with our operations, and even if such integration is accomplished, we may never realize the potential benefits of the acquisition. The integration of acquisitions with our operations requires significant attention from management, may impose substantial demands on our operations or other projects and may impose challenges on the combined business including, but not limited to, consistencies in business standards, procedures, policies, business cultures and internal controls and compliance. Certain acquisitions involve a capital outlay, and the return that we achieved on any capital invested may be less than the return that we would achieve on our other projects or investments. If we fail to complete the integration of recently acquired facilities, we may never fully realize the potential benefits of the related acquisitions.

We are integrating Partnerships in Care’s business into our current business. Successful integration depends on the ability to effect any required changes in operations or personnel which may entail unforeseen liabilities. The integration of Partnerships in Care may expose us to certain risks, including the following: difficulty in integrating Partnerships in Care in a cost-effective manner, including the establishment of effective management information and financial control systems; unforeseen legal, regulatory, contractual, employment or other issues arising out of the combination; combining corporate cultures; maintaining employee morale and retaining key employees; potential disruptions to our on-going business caused by its senior management’s focus on integrating Partnerships in Care; and performance of the combined assets not meeting our expectations or plans. A failure to properly integrate Partnerships in Care could have a corresponding material adverse effect on our business, results of operations, financial condition or prospects.

Benefits may not materialize

When evaluating potential acquisition targets, we identify potential synergies and cost savings that we expect to realize upon the successful completion of the acquisition and the integration of the related operations. We may, however, be unable to achieve or may otherwise never realize the expected benefits. Our ability to realize the expected benefits from potential cost savings and revenue improvement opportunities is subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control, such as changes to government regulation governing or otherwise impacting the behavioral healthcare industry, reductions in reimbursement rates from third-party payors, reductions in service levels under our contracts, operating difficulties, client preferences, changes in competition and general economic or industry conditions. If we are unsuccessful in implementing these improvements or if we do not achieve our expected results, it may adversely impact our business, financial condition or results of operations.

Assumptions of unknown liabilities

Facilities that we acquire, including the facilities acquired from Partnerships in Care, may have unknown or contingent liabilities, including, but not limited to, liabilities for uncertain tax positions, liabilities for failure to comply with healthcare laws and regulations and liabilities for unresolved litigation or regulatory reviews. Although we typically attempt to exclude significant liabilities from our acquisition transactions and seek indemnification from the sellers of such facilities, the purchase agreement with Partnerships in Care contained minimal representations and warranties about the entities and business that we acquired. In addition, we have no indemnification rights against the sellers under the purchase agreement and all of the purchase price consideration was paid at closing of the acquisition of Partnerships in Care. Therefore, we may incur material liabilities for the past activities of acquired entities and facilities. Even in those acquisitions in which we have such rights, we may experience difficulty enforcing the sellers’ obligations, or we may incur material liabilities for the past activities of acquired facilities. Such liabilities and related legal or other costs and/or resulting damage to a facility’s reputation could negatively impact our business, financial condition or results of operations.

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Competing for acquisitions

We face competition for acquisition candidates primarily from other for-profit healthcare companies, as well as from not-for-profit entities. Some of our competitors may have greater resources than we do. As a result, we may pay more to acquire a target business or may agree to less favorable deal terms than we would have otherwise. Our principal competitors for acquisitions have included Universal Health Services, Aurora Behavioral Health Care and private equity firms. Also, suitable acquisitions may not be accomplished due to unfavorable terms. Further, the cost of an acquisition could result in a dilutive effect on our results of operations, depending on various factors, including the amount paid for an acquired facility, the acquired facility’s results of operations, the fair value of assets acquired and liabilities assumed, effects of subsequent legislation and limits on rate increases. In addition, we may have to pay cash, incur debt, or issue equity securities to pay for any such acquisition, which could adversely affect our financial results, result in dilution to our stockholders, result in increased fixed obligations or impede our ability to manage our operations.

Managing growth

Some of the facilities we have acquired or may acquire in the future may have had significantly lower operating margins prior to the time of our acquisition or may have had operating losses prior to such acquisition. If we fail to improve the operating margins of the facilities we acquire, operate such facilities profitably or effectively integrate the operations of the acquired facilities, our results of operations could be negatively impacted.

Failure to comply with the international and U.S. laws and regulations applicable to our international operations could subject us to penalties and other adverse consequences.

We face several risks inherent in conducting business internationally, including compliance with international and U.S. laws and regulations that apply to our international operations. These laws and regulations include U.S. laws such as the Foreign Corrupt Practices Act and other U.S. federal laws and regulations established by the Office of Foreign Asset Control, local laws such as the United Kingdom Bribery Act 2010 or other local laws which prohibit corrupt payments to governmental officials or certain payments or remunerations to customers. Given the high level of complexity of these laws, however, there is a risk that some provisions may be inadvertently breached by us, for example through fraudulent or negligent behavior of individual employees, our failure to comply with certain formal documentation requirements, or otherwise. Violations of these laws and regulations could result in fines, criminal sanctions against us, our officers or our employees, implementation of compliance programs, and prohibitions on the conduct of our business. Any such violations could include prohibitions on our ability to conduct business in the United Kingdom and could materially damage our reputation, our brand, our international expansion efforts, our ability to attract and retain employees, our business and our operating results. Our success depends, in part, on our ability to anticipate these risks and manage these challenges.

Foreign currency exchange rate fluctuations could materially impact our consolidated financial position and results of operations.

The acquisition of Partnerships in Care expanded our operations to the United Kingdom. Accordingly, a portion of our net revenues will be derived from operations in the United Kingdom, and we intend to translate sales and other results denominated in foreign currency into U.S. dollars for our consolidated financial statements. During periods of a strengthening U.S. dollar, our reported international sales and net earnings could be reduced because foreign currencies may translate into fewer U.S. dollars.

In all jurisdictions in which we operate, we are also subject to laws and regulations that govern foreign investment, foreign trade and currency exchange transactions. These laws and regulations may limit our ability to repatriate cash as dividends or otherwise to the United States and may limit our ability to convert foreign currency cash flows into U.S. dollars.

We incurred significant transaction and acquisition-related costs in connection with the acquisition of Partnerships in Care.

We incurred substantial costs in connection with the acquisition of Partnerships in Care, including approximately $16.0 million in transaction-related expenses. In addition, we may incur additional costs to maintain employee morale and to retain key employees, and we will incur substantial fees and costs related to formulating and executing integration plans. Although we expect that the elimination of duplicative costs, as well as the realization of other efficiencies related to the integration of the businesses, should allow us to more than offset incremental transaction and acquisition-related costs over time, this net benefit may not be achieved in the near term, or at all.

We made certain assumptions relating to the acquisition of Partnerships in Care in our forecasts that may prove to be materially inaccurate.

We made certain assumptions relating to the forecast level of cost savings, synergies and associated costs of the acquisition of Partnerships in Care. Our assumptions relating to the forecast level of cost savings, synergies and associated costs of the acquisition of Partnerships in Care may be inaccurate based on the information available to us, including as the result of the failure to realize the

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expected benefits of the acquisition of Partnerships in Care, higher than expected transaction and integration costs and unknown liabilities as well as general economic and business conditions that may adversely affect the combined company following the acquisition of Partnerships in Care. In addition, Partnerships in Care was operating at a net loss for the year ended December 31, 2013 and for the six months ended June 30, 2014, which may impact our ability to achieve synergies and profitability from the acquisition of Partnerships in Care in the near term.

We are subject to taxation in certain foreign jurisdictions following the acquisition of Partnerships in Care. Any adverse development in the tax laws of such jurisdictions or any disagreement with our tax positions could have a material adverse effect on our business, financial condition or results of operations. In addition, our effective tax rate could change materially as a result of certain changes in our mix of United States and foreign earnings and other factors, including changes in tax laws.

We are subject to taxation in, and to the tax laws and regulations of, certain foreign jurisdictions as a result of our operations and our corporate and financing structure after the acquisition of Partnerships in Care. Adverse developments in these tax laws or regulations, or any change in position regarding the application, administration or interpretation thereof, in any applicable jurisdiction, could have a material adverse effect on our business, financial condition or results of operations. In addition, the tax authorities in any applicable jurisdiction may disagree with the tax treatment or characterization of any of our transactions, which, if successfully challenged by such tax authorities, could have a material adverse effect on our business, financial condition or results of operations. Certain changes in the mix of our earnings between jurisdictions and assumptions used in the calculation of income taxes, among other factors, could have a material adverse effect on our overall effective tax rate. In addition, legislative proposals to change the United States taxation of foreign earnings could also increase our effective tax rate.

A worsening of the economic and employment conditions in the geographies in which we operate could materially affect our business and future results of operations.

During periods of high unemployment, governmental entities often experience budget deficits as a result of increased costs and lower than expected tax collections. These budget deficits at the federal, state and local levels have decreased, and may continue to decrease, spending for health and human service programs, including Medicare and Medicaid in the United States, which are significant payor sources for our facilities. In periods of high unemployment, we also face the risk of potential declines in the population covered under private insurance, patient decisions to postpone or decide against receiving behavioral healthcare services, potential increases in the uninsured and underinsured populations we serve and further difficulties in collecting patient co-payment and deductible receivables.

Furthermore, the availability of liquidity and capital resources to fund the continuation and expansion of many business operations worldwide has been limited in recent years. Our ability to access the capital markets on acceptable terms may be severely restricted at a time when we would like, or need, access to those markets, which could have a negative impact on our growth plans, our flexibility to react to changing economic and business conditions and our ability to refinance existing debt (including debt under our Amended and Restated Senior Credit Facility and Senior Notes). The recent economic downturn or other economic conditions could also adversely affect the counterparties to our agreements, including the lenders under the Amended and Restated Senior Credit Facility, causing them to fail to meet their obligations to us.

If we fail to comply with extensive laws and government regulations, we could suffer penalties or be required to make significant changes to our operations.

Companies operating in the behavioral healthcare industry in the United States are required to comply with extensive and complex laws and regulations at the federal, state and local government levels relating to, among other things: billing practices and prices for services; relationships with physicians and other referral sources; necessity and quality of medical care; condition and adequacy of facilities; qualifications of medical and support personnel; confidentiality, maintenance and security issues associated with health-related information and patient health information, or PHI; the screening, stabilization and/or transfer of patients who have emergency medical conditions; certification, licensure and accreditation of our facilities; operating policies and procedures; activities regarding competitors; and addition or expansion of facilities and services.

Among these laws are the anti-kickback provision of the Social Security Act, or the Anti-Kickback Statute, the federal physician self-referral, or the Stark Law, the federal False Claims Act, or the False Claims Act, and similar state laws. These laws, and particularly the Anti-Kickback Statute and the Stark Law, impact the relationships that we may have with physicians and other potential referral sources. We have a variety of financial relationships with physicians and other professionals who refer patients to our facilities, including employment contracts, leases and professional service agreements. The Office of the Inspector General of the Department of Health and Human Services has issued certain exceptions and safe harbor regulations that outline practices that are deemed acceptable under the Stark Law and Anti-Kickback Statute. While we endeavor to comply with applicable exceptions and safe harbors, certain of our current arrangements with physicians and other potential referral sources may not qualify for safe harbor protection. Failure to meet a safe harbor does not mean that the arrangement necessarily violates the Anti-Kickback Statute, but may

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subject the arrangements to greater scrutiny. We cannot offer assurances that practices that are outside of a safe harbor will not be found to violate the Anti-Kickback Statute. Allegations of violations of the Stark Law and Anti-Kickback Statute may be brought under the federal Civil Monetary Penalty Law, which requires a lower burden of proof than other fraud and abuse laws.

These laws and regulations are extremely complex, and, in many cases, we do not have the benefit of regulatory or judicial interpretation. In the future, it is possible that different interpretations of these laws and regulations could subject our current or past practices to allegations of impropriety or illegality or could require us to make changes in our arrangements for facilities, equipment, personnel, services, capital expenditure programs and operating expenses. A determination that we have violated one or more of these laws could subject us to liabilities, including civil penalties, exclusion of one or more facilities from participation in the government healthcare programs and, for violations of certain laws and regulations, criminal penalties. Even the public announcement that we are being investigated for possible violations of these laws could cause our reputation to suffer and have a material adverse effect on our business, financial condition or results of operations. In addition, we cannot predict whether other legislation or regulations at the federal or state level will be adopted, what form such legislation or regulations may take or what their impact on us may be.

The construction and operation of healthcare facilities in the United States are subject to extensive federal, state and local regulation relating to, among other things, the adequacy of medical care, equipment, personnel, operating policies and procedures, fire prevention, rate-setting, compliance with building codes and environmental protection. Additionally, such facilities are subject to periodic inspection by government authorities to assure their continued compliance with these various standards. If we fail to adhere to these standards, we could be subject to monetary and operational penalties.

Many of our U.S. facilities are also accredited by third-party accreditation agencies such as The Joint Commission. If any of our existing healthcare facilities lose their accreditation or any of our new facilities fail to receive accreditation, such facilities could become ineligible to receive reimbursement under Medicare or Medicaid.

Similarly, providers of behavioral healthcare services in the United Kingdom are also subject to a highly regulated business environment. Failure to comply with regulations, lapses in the standards of care, the receipt of poor ratings or lower ratings, the receipt of a negative report that leads to a determination of regulatory noncompliance, or the failure to cure any defect noted in an inspection report could lead to substantial penalties, including the loss of registration or closure of one or more facilities as well as damage to reputation.

Our facilities acquired from Partnerships in Care operate in a highly regulated business environment, which is subject to political and regulatory scrutiny. Failure to comply with regulations or the introduction of new regulations or standards with which Partnerships in Care does not comply could lead to substantial penalties, including the loss of registration on one or more of our facilities.

The business of the facilities acquired from Partnerships in Care is subject to a high level of regulation and oversight, in particular from: the Care Quality Commission (“CQC”), the independent regulator for health and adult social care in England; Healthcare Improvement Scotland (“HIS”), the independent regulator for healthcare services in Scotland; Healthcare Inspectorate Wales (“HIW”), the independent regulator of for all healthcare services in Wales; and Monitor, the non-departmental public body of the United Kingdom government that serves as the sector regulator for health services in England. The regulatory requirements relevant to Partnerships in Care’s business span the range of Partnerships in Care’s operations from the establishment of new facilities, which are subject to registration requirements, to the recruitment and appointment of staff, occupational health and safety, duty of care to the people Partnerships in Care supports, administration of controlled drugs, clinical standards, conduct of Partnerships in Care’s professional and care staff and other requirements.

Inspections by regulators can be carried out on both an announced and, in most cases, unannounced basis, depending on the specific regulatory provisions relating to the different services Partnerships in Care provides. A failure to comply with regulations in the future, the receipt of poor ratings or lower ratings, the receipt of a negative report that leads to a determination of regulatory noncompliance, or Partnerships in Care’s failure to cure any defect noted in an inspection report could result in reputational damage to Partnerships in Care, fines, or the revocation or suspension of the registration or closure of any care facility or service. Additionally, as placing authorities monitor performance, negative changes in regulatory compliance may affect the number of referrals made to Partnerships in Care. In addition, frequent changes are made to regulatory assessment methods.

We cannot guarantee that current laws, regulations and regulatory assessment methodologies will not be modified or replaced in the future. Such future developments and amendments may negatively impact Partnerships in Care’s operations which could have a material adverse effect on Partnerships in Care’s business, results of operations, financial condition or prospects.

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Our business in the United Kingdom relies upon maintaining strong relationships with commissioners employed by publicly funded entities and any reorganization of such publicly funded entities may result in the loss of those relationships.

The relationships that the sales and marketing function of our facilities in the United Kingdom holds with commissioners is a key driver of referrals to such facilities. Should there be a major reorganization of publicly funded entities, such as the NHS reorganization announced in 2010 and implemented between 2012 and 2013, we may need to rebuild such relationships which could result in a decrease in the number of referrals made to the Partnerships in Care facilities, which could have a corresponding material adverse effect on our business, results of operations, financial condition or prospects.

We may be required to spend substantial amounts to comply with statutes and regulations relating to privacy and security of patient health information.

There are currently numerous legislative and regulatory initiatives in both the U.S. and the United Kingdom addressing patient privacy and information security concerns. In particular, federal regulations issued under HIPAA require our U.S. facilities to comply with standards to protect the privacy, security and integrity of PHI. These regulations have imposed extensive administrative requirements, technical and physical information security requirements, restrictions on the use and disclosure of PHI and related financial information and have provided patients with additional rights with respect to their health information. Compliance with these regulations requires substantial expenditures, which could negatively impact our business, financial condition or results of operations. In addition, our management has spent, and may spend in the future, substantial time and effort on compliance measures.

Violations of the privacy and security regulations could subject our operations to substantial civil monetary penalties and substantial other costs and penalties associated with a breach of data security, including criminal penalties.

We may be subject to liabilities from claims brought against our facilities.

We are subject to medical malpractice lawsuits and other legal actions in the ordinary course of business. Some of these actions may involve large claims, as well as significant defense costs. We cannot predict the outcome of these lawsuits or the effect that findings in such lawsuits may have on us. All professional and general liability insurance we purchase is subject to policy limitations. Management believes that, based on our past experience and actuarial estimates, our insurance coverage is adequate considering the claims arising from the operations of our facilities. While we continuously monitor our coverage, our ultimate liability for professional and general liability claims could change materially from our current estimates. If such policy limitations should be partially or fully exhausted in the future, or payments of claims exceed our estimates or are not covered by our insurance, it could have a material adverse effect on our business, financial condition or results of operations.

We have been and could become the subject of governmental investigations, regulatory actions and whistleblower lawsuits.

Healthcare companies in both the United States and the United Kingdom are subject to numerous investigations by various governmental agencies. Certain of our facilities have received, and other facilities may receive, government inquiries from, and may be subject to investigation by, governmental agencies. Depending on whether the underlying conduct in these or future inquiries or investigations could be considered systemic, their resolution could have a material adverse effect on our business, financial condition and results of operations.

Further, under the federal False Claims Act, private parties are permitted to bring qui tam or “whistleblower” lawsuits against companies that submit false claims for payments to, or improperly retain overpayments from, the government. Because qui tam lawsuits are filed under seal, we could be named in one or more such lawsuits of which we are not aware.

We are subject to uncertainties regarding recent health reform and budget legislation.

The expansion of health insurance coverage in the United States under the Patient Protection and Affordable Care Act and the Reconciliation Act, or, collectively, the Health Reform Legislation, may increase the number of patients using our facilities who have either private or public program coverage. In addition, a disproportionately large percentage of new Medicaid coverage is likely to be in states that currently have relatively low income eligibility requirements and may include states where we have facilities. Furthermore, as a result of the Health Reform Legislation, there may be a reduction in uninsured patients, which should reduce our expense from uncollectible accounts receivable.

Notwithstanding the foregoing, the Health Reform Legislation makes a number of other changes to Medicare and Medicaid which management believes may have an adverse impact on us. The various provisions in the Health Reform Legislation that directly or indirectly affect reimbursement are scheduled to take effect over a number of years. Health Reform Legislation provisions are likely to be affected by the incomplete nature of implementing regulations or expected forthcoming interpretive guidance, gradual implementation or future legislation. Further, Health Reform Legislation provisions, such as those creating the Medicare Shared Savings Program and the Independent Payment Advisory Board, create certain flexibilities in how healthcare may be reimbursed by federal programs in the future. Thus, we cannot predict the impact of the Health Reform Legislation on our future reimbursement at this time.

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The Health Reform Legislation also contains provisions aimed at reducing fraud and abuse in healthcare. The Health Reform Legislation amends several existing laws, including the federal Anti-Kickback Statute and the False Claims Act, making it easier for government agencies and private plaintiffs to prevail in lawsuits brought against healthcare providers. Congress revised the intent requirement of the Anti-Kickback Statute to provide that a person is not required to have actual knowledge or specific intent to commit a violation of the Anti-Kickback Statute in order to be found guilty of violating such law. The Health Reform Legislation also provides that any claims for items or services that violate the Anti-Kickback Statute are also considered false claims for purposes of the federal civil False Claims Act. The Health Reform Legislation provides that a healthcare provider that knowingly retains an overpayment in excess of 60 days is subject to the federal civil False Claims Act.

The impact of the Health Reform Legislation on each of our facilities may vary. We cannot predict the impact the Health Reform Legislation may have on our business, results of operations, cash flow, capital resources and liquidity, or whether we will be able to adapt successfully to the changes required by the Health Reform Legislation.

We are similarly unable to guarantee that current United Kingdom laws, regulations and regulatory assessment methodologies will not be modified or replaced in the future. Additionally, there is a risk that budget constraints, public spending cuts (such as the cuts announced by the United Kingdom government in the 2010 Comprehensive Spending Review and implemented in the 2011 and 2012 government budgets) or other financial pressures could cause NHS to reduce funding for the types of services that Partnerships in Care provides. Such policy changes in the United Kingdom could lead to fewer services being purchased by publicly funded entities or material changes being made to their procurement practices, any of which could materially reduce Partnerships in Care’s revenue. These and other future developments and amendments may negatively impact our operations, which could have a material adverse effect on our business, financial condition or results of operations.

We operate in a highly competitive industry, and competition may lead to declines in patient volumes.

The healthcare industry is highly competitive, and competition among healthcare providers (including hospitals) for patients, physicians and other healthcare professionals has intensified in recent years. There are other healthcare facilities that provide behavioral and other mental health services comparable to at least some of those offered by our facilities in each of the geographical areas in which we operate. Some of our competitors are owned by tax-supported governmental agencies or by nonprofit corporations and may have certain financial advantages not available to us, including endowments, charitable contributions, tax-exempt financing and exemptions from sales, property and income taxes.

If our competitors are better able to attract patients, recruit and retain physicians and other healthcare professionals, expand services or obtain favorable managed care contracts at their facilities, we may experience a decline in patient volume and our results of operations may be adversely affected.

NHS is the principal provider of secure mental healthcare services in the United Kingdom, with approximately 70% of the totals beds in the United Kingdom. As the preferred provider, there is a bias toward referrals to NHS, and therefore NHS facilities have maintained high occupancy rates. As a result of budget constraints, independent operators have emerged to satisfy the demand for mental health services not supplied by NHS. We face competition in the United Kingdom from other independent sector providers and publicly funded entities for individuals requiring care and for appropriate sites on which to develop or expand facilities in the United Kingdom. Should we fail to compete effectively with our peers and competitors in the industry, or if the competitive environment intensifies, individuals may be referred elsewhere for services that we provide, negatively impacting our ability to secure referrals and limiting the expansion of our business.

The trend by insurance companies and managed care organizations to enter into sole-source contracts may limit our ability to obtain patients.

Insurance companies and managed care organizations in the United States are entering into sole-source contracts with healthcare providers, which could limit our ability to obtain patients since we do not offer the range of services required for these contracts. Moreover, private insurers, managed care organizations and, to a lesser extent, Medicaid and Medicare, are beginning to carve-out specific services, including mental health and substance abuse services, and establish small, specialized networks of providers for such services at fixed reimbursement rates. Continued growth in the use of carve-out arrangements could materially adversely affect our business to the extent we are not selected to participate in such networks or if the reimbursement rate is not adequate to cover the cost of providing the service.

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Our performance depends on our ability to recruit and retain quality psychiatrists and other physicians.

The success and competitive advantage of our facilities depends, in part, on the number and quality of the psychiatrists and other physicians on the medical staffs of our facilities and our maintenance of good relations with those medical professionals. Although we employ psychiatrists and other physicians at many of our facilities, psychiatrists and other physicians generally are not employees of our facilities, and, in a number of our markets, they have admitting privileges at competing hospitals providing acute or inpatient behavioral health services. Such physicians (including psychiatrists) may terminate their affiliation with us at any time or admit their patients to competing healthcare facilities or hospitals. If we are unable to attract and retain sufficient numbers of quality psychiatrists and other physicians by providing adequate support personnel and facilities that meet the needs of those psychiatrists and other physicians, they may stop referring patients to our facilities and our results of operations may decline.

It may become difficult for us to attract and retain an adequate number of psychiatrists and other physicians to practice in certain of the communities in which our facilities are located. Our failure to recruit psychiatrists and other physicians to these communities or the loss of such medical professionals in these communities could make it more difficult to attract patients to our facilities and thereby may have a material adverse effect on our business, financial condition or results of operations. Additionally, our ability to recruit psychiatrists and other physicians is closely regulated. The form, amount and duration of assistance we can provide to recruited psychiatrists and other physicians is limited by the Stark Law, the Anti-Kickback Statute, state anti-kickback statutes, and related regulations. For example, the Stark Law requires, among other things, that recruitment assistance can be provided only to psychiatrists and other physicians who meet certain geographic and practice relocation requirements, that the amount of assistance cannot be changed during the term of the recruitment agreement, and that the recruitment payments cannot generally benefit psychiatrists and other physicians currently in practice in the community beyond recruitment costs actually incurred by them.

Our facilities face competition for staffing that may increase our labor costs and reduce our profitability.

Our operations depend on the efforts, abilities, and experience of our management and medical support personnel, including our therapists, nurses, pharmacists and mental health technicians, as well as our psychiatrists and other professionals. We compete with other healthcare providers in recruiting and retaining qualified management, physicians (including psychiatrists) and support personnel responsible for the daily operations of our business, financial condition or results of operations.

The nationwide shortage of nurses and other medical support personnel in the United States has been a significant operating issue facing us and other healthcare providers. This shortage may require us to enhance wages and benefits to recruit and retain nurses and other medical support personnel or require us to hire more expensive temporary or contract personnel. In addition, certain of our facilities are required to maintain specified staffing levels. To the extent we cannot meet those levels, we may be required to limit the services provided by these facilities, which would have a corresponding adverse effect on our net operating revenues.

Increased labor union activity is another factor that could adversely affect our labor costs. As of June 30, 2014, labor unions represented employees at only six of our 52 facilities. With the acquisition of Partnerships in Care, the Royal College of Nursing represents nursing employees at all of our facilities in the United Kingdom. To the extent that a greater portion of our employee base unionizes, it is possible that our labor costs could increase materially.

We cannot predict the degree to which we will be affected by the future availability or cost of attracting and retaining talented medical support staff. If our general labor and related expenses increase, we may not be able to raise our rates correspondingly. Our failure either to recruit and retain qualified management, psychiatrists, therapists, nurses and other medical support personnel or control our labor costs could have a material adverse effect on our results of operations.

We depend heavily on key management personnel, and the departure of one or more of our key executives or a significant portion of our local facility management personnel could harm our business.

The expertise and efforts of our senior executives and the chief executive officer, chief financial officer, medical director, physicians and other key members of our facility management personnel are critical to the success of our business. The loss of the services of one or more of our senior executives or of a significant portion of our facility management personnel could significantly undermine our management expertise and our ability to provide efficient, quality healthcare services at our facilities, which could harm our business.

The Partnerships in Care senior management team was important to our acquisition of Partnerships in Care. The loss of members of the Partnerships in Care management team could impact our ability to successfully integrate and operate the Partnerships in Care facilities and business.

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We could face risks associated with, or arising out of, environmental, health and safety laws and regulations.

We are subject to various federal, state and local laws and regulations that:

• regulate certain activities and operations that may have environmental or health and safety effects, such as the generation, handling and disposal of medical wastes;

• impose liability for costs of cleaning up, and damages to natural resources from, past spills, waste disposals on and off-site, or other releases of hazardous materials or regulated substances; and

• regulate workplace safety.

Compliance with these laws and regulations could increase our costs of operation. Violation of these laws may subject us to significant fines, penalties or disposal costs, which could negatively impact our results of operations, financial condition or cash flows. We could be responsible for the investigation and remediation of environmental conditions at currently or formerly operated or leased sites, as well as for associated liabilities, including liabilities for natural resource damages, third party property damage or personal injury resulting from lawsuits that could be brought by the government or private litigants, relating to our operations, the operations of facilities or the land on which our facilities are located. We may be subject to these liabilities regardless of whether we lease or own the facility, and regardless of whether such environmental conditions were created by us or by a prior owner or tenant, or by a third party or a neighboring facility whose operations may have affected such facility or land. That is because liability for contamination under certain environmental laws can be imposed on current or past owners or operators of a site without regard to fault. We cannot assure you that environmental conditions relating to our prior, existing or future sites or those of predecessor companies whose liabilities we may have assumed or acquired will not have a material adverse effect on our business, financial condition or results of operations.

State efforts to regulate the construction or expansion of healthcare facilities in the United States could impair our ability to operate and expand our operations.

A majority of the states in which we operate facilities in the United States have enacted certificate of need, or CON, laws that regulate the construction or expansion of healthcare facilities, certain capital expenditures or changes in services or bed capacity. In giving approval for these actions, these states consider the need for additional or expanded healthcare facilities or services. Our failure to obtain necessary state approval could (i) result in our inability to acquire a targeted facility, complete a desired expansion or make a desired replacement, (ii) make a facility ineligible to receive reimbursement under the Medicare or Medicaid programs or (iii) result in the revocation of a facility’s license or impose civil or criminal penalties on us, any of which could harm our business.

In addition, significant CON reforms have been proposed in a number of states that would increase the capital spending thresholds and provide exemptions of various services from review requirements. In the past, we have not experienced any material adverse effects from such requirements, but we cannot predict the impact of these changes upon our operations.

We may be unable to extend leases at expiration, which could harm our business, financial condition or results of operations.

We lease the real property on which a number of our facilities are located. Our lease agreements generally give us the right to renew or extend the term of the leases and, in certain cases, purchase the real property. These renewal and purchase rights generally are based upon either prescribed formulas or fair market value. Management expects to renew, extend or exercise purchase options with respect to our leases in the normal course of business; however, there can be no assurance that these rights will be exercised in the future or that we will be able to satisfy the conditions precedent to exercising any such renewal, extension or purchase options. Furthermore, the terms of any such options that are based on fair market value are inherently uncertain and could be unacceptable or unfavorable to us depending on the circumstances at the time of exercise. If we are not able to renew or extend our existing leases, or purchase the real property subject to such leases, at or prior to the end of the existing lease terms, or if the terms of such options are unfavorable or unacceptable to us, our business, financial condition or results of operations could be adversely affected.

Controls designed to reduce inpatient services may reduce our revenues.

Controls imposed by Medicare, Medicaid and commercial third-party payors designed to reduce admissions and lengths of stay, commonly referred to as “utilization review,” have affected and are expected to continue to affect our facilities. Inpatient utilization, average lengths of stay and occupancy rates continue to be negatively affected by payor-required preadmission authorization and utilization review and by payor pressure to maximize outpatient and alternative healthcare delivery services for less acutely ill patients. Efforts to impose more stringent cost controls are expected to continue. For example, the Health Reform Legislation potentially expands the use of prepayment review by Medicare contractors by eliminating statutory restrictions on its use. Utilization review is also a requirement of most non-governmental managed-care organizations and other third party payors. Although we are unable to predict the effect these controls and changes will have on our operations, significant limits on the scope of services reimbursed and on reimbursement rates and fees could have a material adverse effect on our financial condition and results of operations.

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Additionally, the outsourcing of behavioral health care to the private sector is a relatively recent development in the United Kingdom. There has been some opposition to outsourcing. While we anticipate that NHS will continue to rely increasingly upon outsourcing, we cannot assure you that the outsourcing trend will continue. The absence of future growth in the outsourcing of behavioral healthcare services could have a material adverse impact on our business, financial condition and results of operations.

Although we have facilities in 24 states, the United Kingdom and Puerto Rico, we have substantial operations in each of the United Kingdom, Arkansas, Mississippi and Tennessee, which makes us especially sensitive to regulatory, economic, environmental and competitive conditions and changes in those locations.

On a pro forma basis at June 30, 2014, we operated 75 facilities, 33 of which are located in the United Kingdom, Arkansas, Mississippi and Tennessee. Our revenues in those facilities represented approximately 48% of our revenue for the twelve months ended June 30, 2014. This concentration makes us particularly sensitive to legislative, regulatory, economic, environmental and competition changes in those locations. Any material change in the current payment programs or regulatory, economic, environmental or competitive conditions in these locations could have a disproportionate effect on our overall business results.

In addition, some of our facilities are located in hurricane-prone areas. In the past, hurricanes have had a disruptive effect on the operations of facilities and the patient populations in hurricane-prone areas. Our business activities could be significantly disrupted by a particularly active hurricane season or even a single storm, and our property insurance may not be adequate to cover losses from such storms or other natural disasters.

We are required to treat patients with emergency medical conditions regardless of ability to pay.

In accordance with our internal policies and procedures, as well as the Emergency Medical Treatment and Active Labor Act, or EMTALA, we provide a medical screening examination to any individual who comes to one of our hospitals while in active labor and/or seeking medical treatment (whether or not such individual is eligible for insurance benefits and regardless of ability to pay) to determine if such individual has an emergency medical condition. If it is determined that such person has an emergency medical condition, we provide such further medical examination and treatment as is required to stabilize the patient’s medical condition, within the facility’s capability, or arrange for transfer of such individual to another medical facility in accordance with applicable law and the treating hospital’s written procedures. Our obligations under EMTALA may increase substantially; Centers for Medicare and Medicaid Services has recently sought stakeholder comments concerning the potential applicability of EMTALA to hospital inpatients and the responsibilities of hospitals with specialized capabilities, such as ours, to accept the transfer of such patients. If the number of indigent and charity care patients with emergency medical conditions we treat increases significantly, or if regulations expanding our obligations to inpatients under EMTALA are proposed and adopted, our results of operations may be harmed.

An increase in uninsured or underinsured patients or the deterioration in the collectability of the accounts of such patients could harm our results of operations.

Collection of receivables from third-party payors and patients is critical to our operating performance. Our primary collection risks relate to uninsured patients and the portion of the bill that is the patient’s responsibility, which primarily includes co-payments and deductibles. We estimate our provisions for doubtful accounts based on general factors such as payor source, the agings of the receivables and historical collection experience. At June 30, 2014, our allowance for doubtful accounts represented approximately 18% of our accounts receivable balance as of such date. We routinely review accounts receivable balances in conjunction with these factors and other economic conditions that might ultimately affect the collectability of the patient accounts and make adjustments to our allowances as warranted. Significant changes in business office operations, payor mix, economic conditions or trends in federal and state governmental health coverage (including implementation of the Health Reform Legislation) could affect our collection of accounts receivable, cash flow and results of operations. If we experience unexpected increases in the growth of uninsured and underinsured patients or in bad debt expenses, our results of operations will be harmed.

A cyber security incident could cause a violation of HIPAA and other privacy laws and regulations or result in a loss of confidential data.

A cyber-attack that bypasses our information technology, or IT, security systems causing an IT security breach, loss of PHI or other data subject to privacy laws, loss of proprietary business information, or a material disruption of our IT business systems, could have a material adverse impact on our business, financial condition or results of operations. In addition, our future results of operations, as well as our reputation, could be adversely impacted by theft, destruction, loss, or misappropriation of PHI, other confidential data or proprietary business information.

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Failure to maintain effective internal control over financial reporting in accordance with Section 404 of Sarbanes-Oxley, could have a material adverse effect on our business.

We are required to maintain internal control over financial reporting under Section 404 of Sarbanes-Oxley. If we are unable to maintain adequate internal control over financial reporting, we may be unable to report our financial information on a timely basis, may suffer adverse regulatory consequences or violations of NASDAQ listing rules and may breach the covenants under our financing arrangements. There could also be a negative reaction in the financial markets due to a loss of investor confidence in us and the reliability of our financial statements. Confidence in our financial statements is also likely to suffer if we or our independent registered public accounting firm report a material weakness in our internal control over financial reporting.

As part of the acquisition of Partnerships in Care, we assumed Partnerships in Care’s existing pension plans and a defined contribution plan and are responsible for an underfunded pension liability. In addition, we may be required to increase funding of the pension plans and/or be subject to restrictions on the use of excess cash.

Partnerships in Care is the sponsor of a defined benefit pension plan (the Partnerships in Care Limited Pension and Life Assurance Plan) that covers approximately 187 members in the United Kingdom, most of whom are inactive and retired former employees. As of May 1, 2005, this plan was closed to new participants but then-current participants continue to accrue benefits. As of December 31, 2013, the net deficit recognized under UK GAAP in respect of this scheme was £4.9 million. Although this underfunded position was considered in determining the purchase price for Partnerships in Care, it may adversely affect the combined company as follows:

• Laws and regulations normally require a new funding plan to be agreed upon every three years, with the next new funding plan to be agreed upon with the plan trustees by March 2015. Changes in actuarial assumptions, including future discount, inflation and interest rates, investment returns and mortality rates, may increase the underfunded position of the pension plan and cause the combined company to increase its contributions to the pension plan to cover underfunded liabilities.

• The pension plan is regulated in the United Kingdom, and trustees represent the interests of covered workers. Laws and regulations could create an immediate funding obligation to the pension plan which could be significantly greater than the £5 million assumed for accounting purposes as of December 31, 2013, and could impact the ability to use Partnerships in Care’s existing cash or the combined company’s future excess cash to grow the business or finance other obligations. The use of Partnerships in Care’s cash and future cash flows beyond the operation of Partnerships in Care’s business or the satisfaction of Partnerships in Care’s obligations would require negotiations with the trustees and regulators.

We also assumed an additional pension plan (the Federated Pension Plan), of which fewer than five Partnerships in Care employees are participants, and a defined contribution plan (the Partnerships in Care Limited New Generation Personal Pension) under which participants receive contributions as a proportion of earnings. Maintenance of these plans may result in additional expenses. Termination of these plans could have an adverse impact on employee relations and a material adverse effect on our financial results.

Future sales of common stock by our existing stockholders may cause our stock price to fall.

The market price of our common stock could decline as a result of sales by our existing stockholders in the market, or the perception that these sales could occur. These sales might also make it more difficult for us to sell equity securities at a time and price that we deem appropriate.

Waud Capital Partners, L.L.C. (“Waud Capital Partners”) and certain of its affiliates, along with certain members of our management, have certain demand and piggyback registration rights with respect to shares of our common stock beneficially owned by them. The presence of additional shares of our common stock trading in the public market, as a result of the exercise of such registration rights, may have an adverse effect on the market price of our securities.

If securities or industry analysts do not publish research or reports about our business, if they were to change their recommendations regarding our stock adversely or if our operating results do not meet their expectations, our stock price and trading volume could decline.

The trading market for our common stock will be influenced by the research and reports that industry or securities analysts publish about us. If one or more of these analysts cease coverage of us or fail to publish regular reports on us, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline. Moreover, if one or more of the analysts who cover us downgrade our stock or if our operating results do not meet their expectations, our stock price could decline.

50

We incur substantial costs as a result of being a public company.

As a public company, we incur significant legal, accounting, insurance and other expenses, including costs associated with public company reporting requirements. We incur costs associated with complying with the requirements of the Sarbanes-Oxley Act of 2002, or Sarbanes-Oxley, the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act, and related rules implemented by the SEC and NASDAQ. Enacted in July 2010, the Dodd-Frank Act contains significant corporate governance and executive compensation-related provisions, some of which the SEC has recently implemented by adopting additional rules and regulations in areas such as executive compensation. The expenses incurred by public companies generally for reporting and corporate governance purposes have been increasing. Management expects these laws and regulations to increase our legal and financial compliance costs and to make some activities more time consuming and costly, although management is currently unable to estimate these costs with any degree of certainty. These laws and regulations could make it more difficult or costly for us to obtain certain types of insurance, including director and officer liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. These laws and regulations could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as our executive officers. Furthermore, if we are unable to satisfy our obligations as a public company, we could be subject to delisting of our common stock, fines, sanctions and other regulatory action and potentially civil litigation.

We are party to a stockholders agreement with Waud Capital Partners which provides it with certain rights over Company matters.

Waud Capital Partners owns approximately 19.7% of our outstanding common stock. In accordance with the terms of the stockholders agreement among Waud Capital Partners, Acadia and certain current and former members of our management, for so long as Waud Capital Partners owns at least 17.5% of our outstanding common stock, it is entitled to designate the pro rata number of our directors that is proportional (but rounded up to the nearest whole number) to its percentage ownership of our outstanding common stock, subject to the NASDAQ rules regarding director independence, and has consent rights to many corporate actions, such as issuing equity or debt securities, paying dividends, acquiring any interest in another company and materially changing our business activities. It is possible that the interests of Waud Capital Partners may in some circumstances conflict with our interests and the interests of our stockholders.

Provisions of our charter documents or Delaware law could delay or prevent an acquisition of us, even if the acquisition would be beneficial to our stockholders, and could make it more difficult for stockholders to change management.

Provisions of our amended and restated certificate of incorporation and amended and restated bylaws may discourage, delay or prevent a merger, acquisition or other change in control that stockholders may consider favorable, including transactions in which stockholders might otherwise receive a premium for their shares. This is because these provisions may prevent or frustrate attempts by stockholders to replace or remove our management. These provisions include:

• a classified board of directors;

• a prohibition on stockholder action through written consent;

• a requirement that special meetings of stockholders be called only upon a resolution approved by a majority of our directors then in office;

• advance notice requirements for stockholder proposals and nominations; and

• the authority of the board of directors to issue preferred stock with such terms as the board of directors may determine.

Section 203 of the Delaware General Corporation Law (“DGCL”) prohibits a publicly-held Delaware corporation from engaging in a business combination with an interested stockholder, generally a person that together with its affiliates owns or within the last three years has owned 15% of voting stock, for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business combination is approved in a prescribed manner. Although we have elected not to be subject to Section 203 of the DGCL, our amended and restated certificate of incorporation contains provisions that have the same effect as Section 203, except that they provide that Waud Capital Partners, its affiliates and any investment fund managed by Waud Capital Partners and any persons to whom Waud Capital Partners sells at least five percent (5%) of our outstanding voting stock will be deemed to have been approved by our board of directors, and thereby not subject to the restrictions set forth in our amended and restated certificate of incorporation that have the same effect as Section 203 of the DGCL. Accordingly, the provision in our amended and restated certificate of incorporation that adopts a modified version of Section 203 of the DGCL may discourage, delay or prevent a change in control of us.

51

As a result of these provisions in our charter documents and Delaware law, the price investors may be willing to pay in the future for shares of our common stock may be limited.

We do not anticipate paying any cash dividends in the foreseeable future.

We intend to retain our future earnings, if any, for use in our business or for other corporate purposes and do not anticipate that cash dividends with respect to common stock will be paid in the foreseeable future. Any decision as to the future payment of dividends will depend on our results of operations, financial position and such other factors as our board of directors, in its discretion, deems relevant. In addition, the terms of our debt substantially limit our ability to pay dividends. As a result, capital appreciation, if any, of our common stock will be a stockholder’s sole source of gain for the foreseeable future.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

During the three months ended June 30, 2014, the Company withheld shares of Company common stock to satisfy employee minimum statutory tax withholding obligations payable upon the vesting of restricted stock, as follows:

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
April 1 – April 30		—				—		—
May 1 – May 31		1,696	$	42.80		—		—
June 1 – June 30		—				—		—
Total		1,696

Item 6. Exhibits

Exhibit No.	Exhibit Description
2.1	Agreement, dated June 3, 2014, by and among Partnerships in Care Holdings Limited, The Royal Bank of Scotland plc, Piper Holdco 2, Ltd. and Acadia Healthcare Company Inc. (the “Company”). (1)
3.1	Amended and Restated Certificate of Incorporation, as filed on October 28, 2011 with the Secretary of State of the State of Delaware (2).
3.2	Amended and Restated Bylaws of the Company. (2).
4.1	Supplemental Indenture, dated as of June 17, 2014, to the Indentures, dated as of November 1, 2011, among the Company, the Guarantors named therein and U.S. Bank National Association, as Trustee. (3)
4.2	Indenture, dated as of July 1, 2014, among the Company, the Guarantors named therein and U.S. Bank National Association, as Trustee. (4)
4.3	Form of 5.125% Senior Note due 2021. (Included in Exhibit 4.2)
4.4	Registration Rights Agreement, dated July 1, 2014, among the Company, the Guarantors named therein and Merrill Lynch, Pierce, Fenner & Smith Incorporated and Jefferies LLC. (4)
10.1	Amended and Restated Employment Agreement, dated April 7, 2014, among the Company, Acadia Management Company, Inc. and Joey A. Jacobs. (5)
10.2	Amended and Restated Employment Agreement, dated April 7, 2014, among the Company, Acadia Management Company, Inc. and Brent Turner. (5)
10.3	Amended and Restated Employment Agreement, dated April 7, 2014, among the Company, Acadia Management Company, Inc. and Ronald M. Fincher. (5)
10.4	Amended and Restated Employment Agreement, dated April 7, 2014, among the Company, Acadia Management Company, Inc. and Christopher L. Howard. (5)
10.5	Employment Agreement, dated as of April 7, 2014, by and among the Company, Acadia, Management Company, Inc. and David M. Duckworth. (5)
10.6	Underwriting Agreement, dated June 11, 2014 by and among the Company, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Jefferies LLC, as representatives of the several underwriters named therein, and the Selling Stockholder. (6)
10.7	Purchase Agreement, dated June 17, 2014, by and among the Company, the Guarantors, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Jefferies LLC as representative of the initial purchasers named therein. (3)
10.8	Fifth Amendment, dated June 16, 2014, to the Amended and Restated Credit Agreement, dated December 31, 2012, by and among Bank of America, NA (Administrative Agent, Swing Line Lender and L/C Issuer) and the Company (f/k/a Acadia Healthcare Company, LLC), the guarantors listed on the signature pages thereto, and the lenders listed on the signature pages thereto. (7)

52

31.1*	Certification of the Chief Executive Officer of the Company pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of the Chief Financial Officer of the Company pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32*	Certification of Chief Executive Officer and Chief Financial Officer of the Company pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS**	XBRL Instance Document.
101.SCH**	XBRL Taxonomy Extension Schema Document.
101.CAL**	XBRL Taxonomy Calculation Linkbase Document.
101.DEF**	XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB**	XBRL Taxonomy Labels Linkbase Document.
101.PRE**	XBRL Taxonomy Presentation Linkbase Document.

(1) Incorporated by reference to exhibits filed with the Company’s Current Report on Form 8-K filed June 6, 2014 (File No.

001-35331).

(2) Incorporated by reference to exhibits filed with the Company’s Current Report on Form 8-K filed November 1, 2011 (File No.

001-35331).

(3) Incorporated by reference to exhibits filed with the Company’s Current Report on Form 8-K filed June 18, 2014 (File No.

001-35331).

(4) Incorporated by reference to exhibits filed with the Company’s Current Report on Form 8-K filed July 2, 2014 (File No.

001-35331).

(5) Incorporated by reference to exhibits filed with the Company’s Current Report on Form 8-K filed April 11, 2014 (File No.

001-35331).

(6) Incorporated by reference to exhibits filed with the Company’s Current Report on Form 8-K filed June 12, 2014 (File No.

001-35331).

(7) Incorporated by reference to exhibits filed with the Company’s Current Report on Form 8-K filed June 17, 2014 (File No.

001-35331).

* Filed herewith.

** The XBRL related information in Exhibit 101 to this quarterly report on Form 10-Q shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability of that section and shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document.

53

SIGNATURES

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

Acadia Healthcare Company, Inc.
By:	/s/ David M. Duckworth
	David M. Duckworth Chief Financial Officer

Dated: July 30, 2014

54

EXHIBIT INDEX

Exhibit No.	Exhibit Description
2.1	Agreement, dated June 3, 2014, by and among Partnerships in Care Holdings Limited, The Royal Bank of Scotland plc, Piper Holdco 2, Ltd. and Acadia Healthcare Company Inc. (the “Company”). (1)
3.1	Amended and Restated Certificate of Incorporation, as filed on October 28, 2011 with the Secretary of State of the State of Delaware (2).
3.2	Amended and Restated Bylaws of the Company. (2).
4.1	Supplemental Indenture, dated as of June 17, 2014, to the Indentures, dated as of November 1, 2011, among the Company, the Guarantors named therein and U.S. Bank National Association, as Trustee. (3)
4.2	Indenture, dated as of July 1, 2014, among the Company, the Guarantors named therein and U.S. Bank National Association, as Trustee. (4)
4.3	Form of 5.125% Senior Note due 2021. (Included in Exhibit 4.2)
4.4	Registration Rights Agreement, dated July 1, 2014, among the Company, the Guarantors named therein and Merrill Lynch, Pierce, Fenner & Smith Incorporated and Jefferies LLC. (4)
10.1	Amended and Restated Employment Agreement, dated April 7, 2014, among the Company, Acadia Management Company, Inc. and Joey A. Jacobs. (5)
10.2	Amended and Restated Employment Agreement, dated April 7, 2014, among the Company, Acadia Management Company, Inc. and Brent Turner. (5)
10.3	Amended and Restated Employment Agreement, dated April 7, 2014, among the Company, Acadia Management Company, Inc. and Ronald M. Fincher. (5)
10.4	Amended and Restated Employment Agreement, dated April 7, 2014, among the Company, Acadia Management Company, Inc. and Christopher L. Howard. (5)
10.5	Employment Agreement, dated as of April 7, 2014, by and among the Company, Acadia, Management Company, Inc. and David M. Duckworth. (5)
10.6	Underwriting Agreement, dated June 11, 2014 by and among the Company, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Jefferies LLC, as representatives of the several underwriters named therein, and the Selling Stockholder. (6)
10.7	Purchase Agreement, dated June 17, 2014, by and among the Company, the Guarantors, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Jefferies LLC as representative of the initial purchasers named therein. (3)
10.8	Fifth Amendment, dated June 16, 2014, to the Amended and Restated Credit Agreement, dated December 31, 2012, by and among Bank of America, NA (Administrative Agent, Swing Line Lender and L/C Issuer) and the Company (f/k/a Acadia Healthcare Company, LLC), the guarantors listed on the signature pages thereto, and the lenders listed on the signature pages thereto. (7)
31.1*	Certification of the Chief Executive Officer of the Company pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of the Chief Financial Officer of the Company pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32*	Certification of Chief Executive Officer and Chief Financial Officer of the Company pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS**	XBRL Instance Document.
101.SCH**	XBRL Taxonomy Extension Schema Document.
101.CAL**	XBRL Taxonomy Calculation Linkbase Document.
101.DEF**	XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB**	XBRL Taxonomy Labels Linkbase Document.
101.PRE**	XBRL Taxonomy Presentation Linkbase Document.

(1) Incorporated by reference to exhibits filed with the Company’s Current Report on Form 8-K filed June 6, 2014 (File No.

001-35331).

(2) Incorporated by reference to exhibits filed with the Company’s Current Report on Form 8-K filed November 1, 2011 (File No.

001-35331).

(3) Incorporated by reference to exhibits filed with the Company’s Current Report on Form 8-K filed June 18, 2014 (File No.

001-35331).

(4) Incorporated by reference to exhibits filed with the Company’s Current Report on Form 8-K filed July 2, 2014 (File No.

001-35331).

(5) Incorporated by reference to exhibits filed with the Company’s Current Report on Form 8-K filed April 11, 2014 (File No.

001-35331).

(6) Incorporated by reference to exhibits filed with the Company’s Current Report on Form 8-K filed June 12, 2014 (File No.

001-35331).

(7) Incorporated by reference to exhibits filed with the Company’s Current Report on Form 8-K filed June 17, 2014 (File No.

001-35331).

* Filed herewith.

** The XBRL related information in Exhibit 101 to this quarterly report on Form 10-Q shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability of that section and shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document.

EX-31.1

Exhibit 31.1

CERTIFICATION OF CEO PURSUANT TO

RULE 13a-14(a)/15d-14(a), AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Joey A. Jacobs, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Acadia Healthcare Company, Inc.;

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 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 U.S. 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 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: July 30, 2014

/s/ Joey A. Jacobs

Joey A. Jacobs

Chairman of the Board and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF CFO PURSUANT TO

RULE 13a-14(a)/15d-14(a), AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, David M. Duckworth, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Acadia Healthcare Company, Inc.;

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 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 U.S. 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 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: July 30, 2014

/s/ David M. Duckworth

David M. Duckworth

Chief Financial Officer

EX-32

Exhibit 32

CERTIFICATIONS OF CEO AND CFO PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Acadia Healthcare Company, Inc. (the “Company”) for the quarterly period ended June 30, 2014, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Joey A. Jacobs, Chief Executive Officer of the Company, and I, David M. Duckworth, Chief Financial Officer of the Company, each certify, for the purpose of complying with 18 U.S.C. Section 1350 and Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

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

Date: July 30, 2014

/s/ Joey A. Jacobs

Joey A. Jacobs

Chairman of the Board and Chief Executive Officer

/s/ David M. Duckworth

David M. Duckworth

Chief Financial Officer

XML

Acquisitions - Preliminary Fair Values of Assets Acquired and Liabilities Assumed in Connection with the PiC Acquisition (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013	Jul. 01, 2014 PiC Acquisition [Member] Subsequent Event [Member]
Business Acquisition [Line Items]
Cash			$ 12,000
Accounts receivable			7,300
Prepaid expenses and other current assets			5,000
Property and equipment			610,000
Goodwill	665,695	661,549	98,000
Intangible assets			3,000
Total assets acquired			735,300
Accounts payable			6,000
Accrued salaries and benefits			6,000
Other accrued expenses			8,000
Deferred tax liabilities - noncurrent			20,000
Other liabilities			6,000
Total liabilities assumed			46,000
Net assets acquired			$ 689,300

XML

Equity-Based Compensation - Restricted Stock Unit Activity (Detail) (Restricted Stock Units [Member], USD $)	6 Months Ended	12 Months Ended
	Jun. 30, 2014	Dec. 31, 2013
Restricted Stock Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unvested, Number of Shares/Units, Beginning balance	95,751	68,628
Granted, Number of Units	108,449	72,876
Cancelled, Number of Units	0	0
Vested, Number of Units	(79,087)	(45,753)
Unvested, Number of Shares/Units, Ending balance	125,113	95,751
Unvested, Weighted Average Grant-Date Fair Value, Beginning balance	$ 23.05	$ 16.11
Granted, Weighted Average Grant-Date Fair Value	$ 50.75	$ 29.39
Cancelled, Weighted Average Grant-Date Fair Value	$ 0.00	$ 0.00
Vested, Weighted Average Grant-Date Fair Value	$ 21.81	$ 16.11
Unvested , Weighted Average Grant-Date Fair Value, Ending balance	$ 38.73	$ 23.05

XML

Long-Term Debt - Components of Long Term Debt (Parenthetical) (Detail)	6 Months Ended	12 Months Ended
	Jun. 30, 2014	Dec. 31, 2013
12.875% Senior Notes Due 2018 [Member]
Line of Credit Facility [Line Items]
Debt instrument interest rate	12.875%	12.875%
Senior notes maturity date	2018	2018
6.125% Senior Notes Due 2021 [Member]
Line of Credit Facility [Line Items]
Debt instrument interest rate	6.125%	6.125%
Senior notes maturity date	2021	2021
9.0% Revenue Bonds [Member]
Line of Credit Facility [Line Items]
Debt instrument interest rate	9.00%	9.00%
9.5% Revenue Bonds [Member]
Line of Credit Facility [Line Items]
Debt instrument interest rate	9.50%	9.50%

XML

Equity-Based Compensation - Schedule of Stock Options Valuation Assumptions (Detail) (USD $)	6 Months Ended	12 Months Ended
	Jun. 30, 2014	Dec. 31, 2013
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Weighted average grant-date fair value of options	$ 18.07	$ 11.62
Risk-free interest rate	1.70%	1.00%
Expected volatility	36.00%	40.00%
Expected life (in years)	5 years 6 months	5 years 6 months

XML

Discontinued Operations - Summary of Results from Discontinued Operations (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Discontinued Operations And Disposal Groups [Abstract]
Revenue	$ 0	$ 0	$ 0	$ 0
(Loss) income from discontinued operations, net of income taxes	$ (6)	$ (74)	$ 31	$ (390)

XML

Description of Business and Basis of Presentation - Additional Information (Detail)		0 Months Ended		6 Months Ended
	Jun. 30, 2014 State	Jul. 01, 2014 PiC Acquisition [Member] Subsequent Event [Member] Facility Beds	Jul. 01, 2014 PiC Acquisition [Member] Subsequent Event [Member] Beds	Jun. 30, 2014 Behavioral Healthcare Facilities [Member] Facility Beds
Business And Basis Of Presentation [Line Items]
Number of inpatient psychiatric facilities				52
Number of inpatient psychiatric beds				4,400
Number of states covered under inpatient psychiatric facilities	24
Number of inpatient psychiatric facilities		23
Number of inpatient psychiatric beds			1,200
Percentage of ownership in subsidiaries	100.00%

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Derivatives - Additional Information (Detail) (USD $)	Jun. 30, 2014 Contract	Jul. 01, 2014 Subsequent Event [Member]
Derivative [Line Items]
Number of foreign currency forward contracts	2
Fair value of financial instruments receivable	$ 13,735,000
Settlement of foreign currency forward contracts		$ 15,300,000

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Acquisitions (Tables)

6 Months Ended

Jun. 30, 2014

Preliminary Fair Values of Assets Acquired and Liabilities Assumed at Corresponding Acquisition Date

The preliminary fair values of assets acquired during the six months ended June 30, 2014 in connection with the Pacific Grove acquisition were as follows (in thousands):

Property and equipment	$	6,500
Goodwill		3,796
Intangible assets		204
Total assets acquired		10,500
Total liabilities assumed		—
Net assets acquired	$	10,500

The fair values of assets acquired and liabilities assumed during 2013, at the corresponding acquisition dates, were as follows (in thousands):

	UMC Facilities		Other		Total
Cash	$	52	$	873	$	925
Accounts receivable		4,961		5,868		10,829
Prepaid expenses and other current assets		721		3,067		3,788
Property and equipment		22,347		42,672		65,019
Goodwill		67,559		37,586		105,145
Intangible assets		1,505		1,910		3,415
Other assets		4,712		29		4,741
Total assets acquired		101,857		92,005		193,862
Accounts payable		1,535		7,487		9,022
Accrued salaries and benefits		588		3,079		3,667
Other accrued expenses		315		2,289		2,604
Other liabilities		—		2,360		2,360
Total liabilities assumed		2,438		15,215		17,653
Net assets acquired	$	99,419	$	76,790	$	176,209

Transaction Related Expenses as Incurred

Transaction-related expenses comprised the following costs for the three and six months ended June 30, 2014 and 2013 (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
Legal, accounting and other costs	$	3,016	$	798	$	4,136	$	1,803
Severance and contract termination costs		—		557		459		1,026
	$	3,016	$	1,355	$	4,595	$	2,829

Pro Forma Financial Information for Acquisitions Occurred

The following table provides certain pro forma financial information for the Company as if the 2013 and 2014 Acquisitions and the acquisition of PiC on July 1, 2014 had occurred as of January 1, 2013 (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
Revenue	$	286,675	$	254,408	$	557,568	$	500,496
Income from continuing operations, before income taxes	$	23,616	$	9,924	$	30,471	$	6,913

PiC Acquisition [Member]

Preliminary Fair Values of Assets Acquired and Liabilities Assumed at Corresponding Acquisition Date

The preliminary fair values of assets acquired and liabilities assumed in connection with the PiC acquisition are estimated as follows (in thousands).

	PiC Acquisition
Cash	$	12,000
Accounts receivable		7,300
Prepaid expenses and other current assets		5,000
Property and equipment		610,000
Goodwill		98,000
Intangible assets		3,000
Total assets acquired		735,300
Accounts payable		6,000
Accrued salaries and benefits		6,000
Other accrued expenses		8,000
Deferred tax liabilities – noncurrent		20,000
Other liabilities		6,000
Total liabilities assumed		46,000
Net assets acquired	$	689,300

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Equity - Additional Information (Detail) (USD $)	0 Months Ended	6 Months Ended
	Jun. 17, 2014	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013
Equity [Line Items]
Preferred stock, number of shares proposed to be issued		10,000,000		10,000,000
Common stock, number of shares proposed to be issued		90,000,000		90,000,000
Common stock voting rights		One vote for each share
Common stock offered	8,881,794	59,161,654		50,070,980
Common stock offer price	$ 44.00	$ 0.01		$ 0.01
Underwriting discount amount	$ 15,600,000
Additional offering-related expenses	800,000
Net proceeds from sale of shares		374,336,000	0
Equity [Member]
Equity [Line Items]
Net proceeds from sale of shares	$ 374,300,000
Maximum [Member]
Equity [Line Items]
Preferred stock, number of shares proposed to be issued		10,000,000
Common stock, number of shares proposed to be issued		90,000,000

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Goodwill and Other Intangible Assets - Other Identifiable Intangible Assets and Related Accumulated Amortization (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Schedule Of Finite and Indefinite Lived Other Intangible Assets [Line Items]
Intangible assets subject to amortization, Gross Carrying Amount	$ 3,347	$ 3,347
Intangible assets not subject to amortization, Gross Carrying Amount	19,713	19,152
Total	23,060	22,499
Intangible assets subject to amortization, Accumulated Amortization	(2,208)	(1,931)
Intangible assets not subject to amortization, Accumulated Amortization
Total	(2,208)	(1,931)
Contract Intangible Assets [Member]
Schedule Of Finite and Indefinite Lived Other Intangible Assets [Line Items]
Intangible assets subject to amortization, Gross Carrying Amount	2,100	2,100
Intangible assets subject to amortization, Accumulated Amortization	(1,120)	(910)
Non-Compete Agreements [Member]
Schedule Of Finite and Indefinite Lived Other Intangible Assets [Line Items]
Intangible assets subject to amortization, Gross Carrying Amount	1,247	1,247
Intangible assets subject to amortization, Accumulated Amortization	(1,088)	(1,021)
Licenses and Accreditations [Member]
Schedule Of Finite and Indefinite Lived Other Intangible Assets [Line Items]
Intangible assets not subject to amortization, Gross Carrying Amount	8,595	8,391
Intangible assets not subject to amortization, Accumulated Amortization
Trade Names [Member]
Schedule Of Finite and Indefinite Lived Other Intangible Assets [Line Items]
Intangible assets not subject to amortization, Gross Carrying Amount	3,000	3,000
Intangible assets not subject to amortization, Accumulated Amortization
Certificates of Need [Member]
Schedule Of Finite and Indefinite Lived Other Intangible Assets [Line Items]
Intangible assets not subject to amortization, Gross Carrying Amount	8,118	7,761
Intangible assets not subject to amortization, Accumulated Amortization

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Acquisitions - Preliminary Fair Values of Assets Acquired and Liabilities Assumed at Corresponding Acquisition Date (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Business Acquisition [Line Items]
Goodwill	$ 665,695	$ 661,549
2014 Acquisitions [Member] | Pacific Grove [Member]
Business Acquisition [Line Items]
Property and equipment	6,500
Goodwill	3,796
Intangible assets	204
Total assets acquired	10,500
Total liabilities assumed	0
Net assets acquired	10,500
2013 Acquisitions [Member]
Business Acquisition [Line Items]
Cash		925
Accounts receivable		10,829
Prepaid expenses and other current assets		3,788
Property and equipment		65,019
Goodwill		105,145
Intangible assets		3,415
Other assets		4,741
Total assets acquired		193,862
Accounts payable		9,022
Accrued salaries and benefits		3,667
Other accrued expenses		2,604
Other liabilities		2,360
Total liabilities assumed		17,653
Net assets acquired		176,209
2013 Acquisitions [Member] | UMC Facilities [Member]
Business Acquisition [Line Items]
Cash		52
Accounts receivable		4,961
Prepaid expenses and other current assets		721
Property and equipment		22,347
Goodwill		67,559
Intangible assets		1,505
Other assets		4,712
Total assets acquired		101,857
Accounts payable		1,535
Accrued salaries and benefits		588
Other accrued expenses		315
Total liabilities assumed		2,438
Net assets acquired		99,419
2013 Acquisitions [Member] | Other [Member]
Business Acquisition [Line Items]
Cash		873
Accounts receivable		5,868
Prepaid expenses and other current assets		3,067
Property and equipment		42,672
Goodwill		37,586
Intangible assets		1,910
Other assets		29
Total assets acquired		92,005
Accounts payable		7,487
Accrued salaries and benefits		3,079
Other accrued expenses		2,289
Other liabilities		2,360
Total liabilities assumed		15,215
Net assets acquired		$ 76,790

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Equity-Based Compensation - Stock Option Activity (Detail) (USD $) In Thousands, except Share data, unless otherwise specified	6 Months Ended	12 Months Ended
	Jun. 30, 2014	Dec. 31, 2013	Dec. 31, 2012
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Options outstanding, Beginning balance	798,809	555,097
Options granted	187,463	411,800
Options exercised	(141,338)	(126,662)
Options cancelled	(40,789)	(41,426)
Options outstanding, Ending balance	804,145	798,809	555,097
Options outstanding, Weighted Average Exercise Price, Beginning balance	$ 21.93	$ 13.13
Options exercisable, Ending balance	144,970	133,647
Options granted, Weighted Average Exercise Price	$ 50.32	$ 30.55
Options exercised, Weighted Average Exercise Price	$ 13.45	$ 9.36
Options cancelled, Weighted Average Exercise Price	$ 31.37	$ 23.50
Options outstanding, Weighted Average Exercise Price, Ending balance	$ 28.90	$ 21.93	$ 13.13
Options outstanding, Aggregate Intrinsic Value, Beginning balance	$ 10,700	$ 5,632
Options exercisable, Weighted Average Exercise Price, Ending balance	$ 20.45	$ 11.15
Options granted, Aggregate Intrinsic Value	41	2,059
Options granted, Weighted Average Remaining Contractual Term	9 years 8 months 5 days	9 years 3 months 18 days
Options exercised, Aggregate Intrinsic Value	4,126	2,803
Options outstanding, Weighted Average Remaining Contractual Term	8 years 3 months 11 days	8 years 2 months 12 days	7 years 6 months 11 days
Options cancelled, Aggregate Intrinsic Value
Options exercisable, Weighted Average Remaining Contractual Term, Ending balance	6 years 1 month 24 days	4 years 9 months 22 days
Options outstanding, Aggregate Intrinsic Value, Ending balance	15,131	10,700	5,632
Options exercisable, Aggregate Intrinsic Value, Ending balance	$ 4,537	$ 3,472

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Financial Information for the Company and Its Subsidiaries - Summary of Condensed Consolidating Balance Sheets (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013	Jun. 30, 2013	Dec. 31, 2012
Current assets:
Cash and cash equivalents	$ 277,744	$ 4,569	$ 7,399	$ 49,399
Accounts receivable, net	110,904	95,885
Deferred tax assets	12,756	15,703
Other current assets	48,192	28,969
Total current assets	449,596	145,126
Property and equipment, net	419,386	370,109
Goodwill	665,695	661,549
Intangible assets, net	20,852	20,568
Deferred tax assets - noncurrent	4,227	0
Investment in subsidiaries	0	0
Other assets	32,796	27,307
Total assets	1,592,552	1,224,659
Current liabilities:
Current portion of long-term debt	11,445	15,195
Accounts payable	31,515	36,026
Accrued salaries and benefits	39,445	37,721
Other accrued liabilities	20,260	25,748
Total current liabilities	102,665	114,690
Long-term debt	555,812	601,941
Deferred tax liabilities - noncurrent	17,894	7,971
Other liabilities	20,959	19,347
Total liabilities	697,330	743,949
Total equity	895,222	480,710
Total liabilities and equity	1,592,552	1,224,659
Parent [Member]
Current assets:
Cash and cash equivalents	0	0	0	0
Accounts receivable, net	0	0
Deferred tax assets	0	0
Other current assets	0	0
Total current assets	0	0
Property and equipment, net	0	0
Goodwill	0	0
Intangible assets, net	0	0
Deferred tax assets - noncurrent	2,555
Investment in subsidiaries	1,395,166	1,034,160
Other assets	50,417	46,236
Total assets	1,448,138	1,080,396
Current liabilities:
Current portion of long-term debt	11,250	15,000
Accounts payable	0	0
Accrued salaries and benefits	0	0
Other accrued liabilities	10,352	4,876
Total current liabilities	21,602	19,876
Long-term debt	531,314	577,216
Deferred tax liabilities - noncurrent	0	2,594
Other liabilities	0	0
Total liabilities	552,916	599,686
Total equity	895,222	480,710
Total liabilities and equity	1,448,138	1,080,396
Combined Subsidiary Guarantors [Member]
Current assets:
Cash and cash equivalents	274,517	0	6,121	49,307
Accounts receivable, net	100,249	86,597
Deferred tax assets	17,841	15,284
Other current assets	46,868	27,886
Total current assets	439,475	129,767
Property and equipment, net	386,616	340,175
Goodwill	568,391	564,539
Intangible assets, net	18,862	18,578
Deferred tax assets - noncurrent	0
Investment in subsidiaries	0	0
Other assets	12,818	11,675
Total assets	1,426,162	1,064,734
Current liabilities:
Current portion of long-term debt	0	0
Accounts payable	29,803	36,289
Accrued salaries and benefits	37,670	36,027
Other accrued liabilities	14,330	19,982
Total current liabilities	81,803	92,298
Long-term debt	0	0
Deferred tax liabilities - noncurrent	21,535	11,138
Other liabilities	20,959	19,347
Total liabilities	124,297	122,783
Total equity	1,301,865	941,951
Total liabilities and equity	1,426,162	1,064,734
Combined Non-Guarantors [Member]
Current assets:
Cash and cash equivalents	3,227	6,494	1,278	92
Accounts receivable, net	10,655	9,288
Deferred tax assets	461	419
Other current assets	1,324	1,083
Total current assets	15,667	17,284
Property and equipment, net	32,770	29,934
Goodwill	97,304	97,010
Intangible assets, net	1,990	1,990
Deferred tax assets - noncurrent	5,313
Investment in subsidiaries	0	0
Other assets	2,321	8,082
Total assets	155,365	154,300
Current liabilities:
Current portion of long-term debt	524	195
Accounts payable	1,712	1,662
Accrued salaries and benefits	1,775	1,694
Other accrued liabilities	1,124	890
Total current liabilities	5,135	4,441
Long-term debt	56,929	57,650
Deferred tax liabilities - noncurrent	0	0
Other liabilities	0	0
Total liabilities	62,064	62,091
Total equity	93,301	92,209
Total liabilities and equity	155,365	154,300
Consolidating Adjustments [Member]
Current assets:
Cash and cash equivalents	0	(1,925)	0	0
Accounts receivable, net	0	0
Deferred tax assets	(5,546)	0
Other current assets	0	0
Total current assets	(5,546)	(1,925)
Property and equipment, net	0	0
Goodwill	0	0
Intangible assets, net	0	0
Deferred tax assets - noncurrent	(3,641)
Investment in subsidiaries	(1,395,166)	(1,034,160)
Other assets	(32,760)	(38,686)
Total assets	(1,437,113)	(1,074,771)
Current liabilities:
Current portion of long-term debt	(329)	0
Accounts payable	0	(1,925)
Accrued salaries and benefits	0	0
Other accrued liabilities	(5,546)	0
Total current liabilities	(5,875)	(1,925)
Long-term debt	(32,431)	(32,925)
Deferred tax liabilities - noncurrent	(3,641)	(5,761)
Other liabilities	0	0
Total liabilities	(41,947)	(40,611)
Total equity	(1,395,166)	(1,034,160)
Total liabilities and equity	$ (1,437,113)	$ (1,074,771)

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Long-Term Debt - Components of Long Term Debt (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013	Nov. 01, 2011
Line of Credit Facility [Line Items]
Aggregate senior note principal amount	$ 567,257	$ 617,136	$ 150,000
Less: current portion	(11,445)	(15,195)
Long-term debt	555,812	601,941
Senior Secured Term Loans [Member]
Line of Credit Facility [Line Items]
Aggregate senior note principal amount	296,250	292,500
Senior Secured Revolving Line of Credit [Member]
Line of Credit Facility [Line Items]
Aggregate senior note principal amount		53,500
12.875% Senior Notes Due 2018 [Member]
Line of Credit Facility [Line Items]
Aggregate senior note principal amount	96,314	96,216
6.125% Senior Notes Due 2021 [Member]
Line of Credit Facility [Line Items]
Aggregate senior note principal amount	150,000	150,000
9.0% and 9.5% Revenue Bonds [Member]
Line of Credit Facility [Line Items]
Aggregate senior note principal amount	$ 24,693	$ 24,920

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Earnings Per Share

6 Months Ended

Jun. 30, 2014

Earnings Per Share [Abstract]

Earnings Per Share

2. Earnings Per Share

Basic and diluted earnings per share are calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 260, “Earnings Per Share,” based on the weighted-average number of shares outstanding in each period and dilutive stock options, unvested shares and warrants, to the extent such securities have a dilutive effect on earnings per share.

The following table sets forth the computation of basic and diluted earnings per share for the three months ended June 30, 2014 and 2013 (in thousands except per share amounts):

	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014		2013
Numerator:
Basic and diluted earnings per share:
Income from continuing operations	$	22,457		$	12,271		$	35,478	$	16,325
(Loss) income from discontinued operations		(6	)		(74	)		31		(390	)
Net income	$	22,451		$	12,197		$	35,509	$	15,935
Denominator:
Weighted average shares outstanding for basic earnings per share		51,616			50,009			50,872		49,961
Effect of dilutive instruments		203			273			302		235
Shares used in computing diluted earnings per common share		51,819			50,282			51,174		50,196
Basic earnings per share:
Income from continuing operations	$	0.43		$	0.24		$	0.70	$	0.33
(Loss) income from discontinued operations		—			—			—		(0.01	)
Net income	$	0.43		$	0.24		$	0.70	$	0.32
Diluted earnings per share:
Income from continuing operations	$	0.43		$	0.24		$	0.69	$	0.33
(Loss) income from discontinued operations		—			—			—		(0.01	)
Net income	$	0.43		$	0.24		$	0.69	$	0.32

Approximately 0.6 million and 0.4 million shares of common stock issuable upon exercise of outstanding stock option awards were excluded from the calculation of diluted earnings per share for the three months ended June 30, 2014 and 2013, respectively, because their effect would have been anti-dilutive. Approximately 0.5 million and 0.7 million shares of common stock issuable upon exercise of outstanding stock option awards were excluded from the calculation of diluted earnings per share for the six months ended June 30, 2014 and 2013, respectively, because their effect would have been anti-dilutive.

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Financial Information for the Company and Its Subsidiaries - Summary of Condensed Consolidating Statement of Operations (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Condensed Financial Statements, Captions [Line Items]
Revenue before provision for doubtful accounts	$ 220,664	$ 182,951	$ 426,783	$ 348,656
Provision for doubtful accounts	(6,861)	(5,457)	(11,562)	(9,949)
Revenue	213,803	177,494	415,221	338,707
Salaries, wages and benefits	122,473	100,764	240,048	195,115
Professional fees	10,891	9,324	21,273	18,338
Supplies	10,596	9,613	20,660	18,211
Rents and leases	2,889	2,394	5,658	4,721
Other operating expenses	24,646	20,096	47,756	37,079
Depreciation and amortization	5,935	4,212	11,371	7,834
Interest expense, net	9,730	9,445	19,437	18,207
Gain on foreign currency derivatives	(13,735)	0	(13,735)	0
Debt extinguishment costs	0	0	0	9,350
Transaction-related expenses	3,016	1,355	4,595	2,829
Total expenses	176,441	157,203	357,063	311,684
Income (Loss) from continuing operations before income taxes	37,362	20,291	58,158	27,023
Equity in earnings of subsidiaries	0	0	0	0
Provision for (benefit from) income taxes	14,905	8,020	22,680	10,698
Income (loss) from continuing operations	22,457	12,271	35,478	16,325
Income (loss) from discontinued operations, net of income taxes	(6)	(74)	31	(390)
Net income (loss)	22,451	12,197	35,509	15,935
Parent [Member]
Condensed Financial Statements, Captions [Line Items]
Revenue before provision for doubtful accounts	0	0	0	0
Provision for doubtful accounts	0	0	0	0
Revenue	0	0	0	0
Salaries, wages and benefits	2,406	1,812	4,170	2,413
Professional fees	0	0	0	0
Supplies	0	0	0	0
Rents and leases	0	0	0	0
Other operating expenses	0	0	0	0
Depreciation and amortization	0	0	0	0
Interest expense, net	9,202	8,688	18,313	17,028
Gain on foreign currency derivatives	(13,735)		(13,735)
Debt extinguishment costs				9,350
Transaction-related expenses	0	0	0	0
Total expenses	(2,127)	10,500	8,748	28,791
Income (Loss) from continuing operations before income taxes	2,127	(10,500)	(8,748)	(28,791)
Equity in earnings of subsidiaries	20,972	18,500	40,839	33,253
Provision for (benefit from) income taxes	648	(4,197)	(3,418)	(11,473)
Income (loss) from continuing operations	22,451	12,197	35,509	15,935
Income (loss) from discontinued operations, net of income taxes	0	0	0	0
Net income (loss)	22,451	12,197	35,509	15,935
Combined Subsidiary Guarantors [Member]
Condensed Financial Statements, Captions [Line Items]
Revenue before provision for doubtful accounts	207,143	174,901	400,425	336,907
Provision for doubtful accounts	(5,954)	(4,922)	(10,464)	(9,272)
Revenue	201,189	169,979	389,961	327,635
Salaries, wages and benefits	114,976	95,609	225,629	187,593
Professional fees	9,691	8,787	18,944	17,494
Supplies	9,967	9,139	19,353	17,548
Rents and leases	2,613	2,207	5,108	4,478
Other operating expenses	22,522	18,148	43,600	34,026
Depreciation and amortization	5,581	3,881	10,666	7,307
Interest expense, net	0	0	0	0
Gain on foreign currency derivatives	0		0
Debt extinguishment costs				0
Transaction-related expenses	3,016	1,355	4,595	2,829
Total expenses	168,366	139,126	327,895	271,275
Income (Loss) from continuing operations before income taxes	32,823	30,853	62,066	56,360
Equity in earnings of subsidiaries	0	0	0	0
Provision for (benefit from) income taxes	13,315	12,316	24,249	22,463
Income (loss) from continuing operations	19,508	18,537	37,817	33,897
Income (loss) from discontinued operations, net of income taxes	(6)	(74)	31	(390)
Net income (loss)	19,502	18,463	37,848	33,507
Combined Non-Guarantors [Member]
Condensed Financial Statements, Captions [Line Items]
Revenue before provision for doubtful accounts	13,521	8,050	26,358	11,749
Provision for doubtful accounts	(907)	(535)	(1,098)	(677)
Revenue	12,614	7,515	25,260	11,072
Salaries, wages and benefits	5,091	3,343	10,249	5,109
Professional fees	1,200	537	2,329	844
Supplies	629	474	1,307	663
Rents and leases	276	187	550	243
Other operating expenses	2,124	1,948	4,156	3,053
Depreciation and amortization	354	331	705	527
Interest expense, net	528	757	1,124	1,179
Gain on foreign currency derivatives	0		0
Debt extinguishment costs				0
Transaction-related expenses	0	0	0	0
Total expenses	10,202	7,577	20,420	11,618
Income (Loss) from continuing operations before income taxes	2,412	(62)	4,840	(546)
Equity in earnings of subsidiaries	0	0	0	0
Provision for (benefit from) income taxes	942	(99)	1,849	(292)
Income (loss) from continuing operations	1,470	37	2,991	(254)
Income (loss) from discontinued operations, net of income taxes	0	0	0	0
Net income (loss)	1,470	37	2,991	(254)
Consolidating Adjustments [Member]
Condensed Financial Statements, Captions [Line Items]
Revenue before provision for doubtful accounts	0	0	0	0
Provision for doubtful accounts	0	0	0	0
Revenue	0	0	0	0
Salaries, wages and benefits	0	0	0	0
Professional fees	0	0	0	0
Supplies	0	0	0	0
Rents and leases	0	0	0	0
Other operating expenses	0	0	0	0
Depreciation and amortization	0	0	0	0
Interest expense, net	0	0	0	0
Gain on foreign currency derivatives	0		0
Debt extinguishment costs				0
Transaction-related expenses	0	0	0	0
Total expenses	0	0	0	0
Income (Loss) from continuing operations before income taxes	0	0	0	0
Equity in earnings of subsidiaries	(20,972)	(18,500)	(40,839)	(33,253)
Provision for (benefit from) income taxes	0	0	0	0
Income (loss) from continuing operations	(20,972)	(18,500)	(40,839)	(33,253)
Income (loss) from discontinued operations, net of income taxes	0	0	0	0
Net income (loss)	$ (20,972)	$ (18,500)	$ (40,839)	$ (33,253)

XML

Goodwill and Other Intangible Assets - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Schedule Of Finite and Indefinite Lived Other Intangible Assets [Line Items]
Capitalized costs incurred to obtain certificates of need			$ 0.4	$ 0.3
Amortization expense	0.1	0.2	0.3	0.4
Estimated amortization expense, 2014	0.5		0.5
Estimated amortization expense, 2015	0.5		0.5
Estimated amortization expense, 2016	0.4		0.4
Estimated amortization expense, 2017	0		0
Estimated amortization expense, 2018	0		0
Contract Intangible Assets [Member]
Schedule Of Finite and Indefinite Lived Other Intangible Assets [Line Items]
Non-compete agreement term			5 years
Greenleaf Center [Member] | Certificates of Need [Member]
Schedule Of Finite and Indefinite Lived Other Intangible Assets [Line Items]
Acquisition of intangible assets with a preliminary fair value			0.6
Delta Medical Center [Member]
Schedule Of Finite and Indefinite Lived Other Intangible Assets [Line Items]
Acquisition of intangible assets with a preliminary fair value			0.8
Delta Medical Center [Member] | Certificates of Need [Member]
Schedule Of Finite and Indefinite Lived Other Intangible Assets [Line Items]
Acquisition of intangible assets with a preliminary fair value			0.6
Delta Medical Center [Member] | Licenses and Accreditations [Member]
Schedule Of Finite and Indefinite Lived Other Intangible Assets [Line Items]
Acquisition of intangible assets with a preliminary fair value			0.2
UMC Facilities [Member]
Schedule Of Finite and Indefinite Lived Other Intangible Assets [Line Items]
Acquisition of intangible assets with a preliminary fair value			1.5
UMC Facilities [Member] | Certificates of Need [Member]
Schedule Of Finite and Indefinite Lived Other Intangible Assets [Line Items]
Acquisition of intangible assets with a preliminary fair value			1.3
UMC Facilities [Member] | Licenses and Accreditations [Member]
Schedule Of Finite and Indefinite Lived Other Intangible Assets [Line Items]
Acquisition of intangible assets with a preliminary fair value			0.2
Longleaf Hospital [Member] | Licenses and Accreditations [Member]
Schedule Of Finite and Indefinite Lived Other Intangible Assets [Line Items]
Acquisition of intangible assets with a preliminary fair value			0.2
Cascade Behavioral Hospital [Member] | Certificates of Need [Member]
Schedule Of Finite and Indefinite Lived Other Intangible Assets [Line Items]
Acquisition of intangible assets with a preliminary fair value			0.3
Pacific Grove [Member] | Licenses and Accreditations [Member]
Schedule Of Finite and Indefinite Lived Other Intangible Assets [Line Items]
Acquisition of intangible assets with a preliminary fair value			$ 0.2

XML

Long-Term Debt (Tables)

6 Months Ended

Jun. 30, 2014

Debt Disclosure [Abstract]

Components of Long Term Debt

Long-term debt consisted of the following (in thousands):

	June 30, 2014			December 31, 2013
Amended and Restated Senior Credit Facility:
Senior Secured Term Loans	$	296,250		$	292,500
Senior Secured Revolving Line of Credit		—			53,500
12.875% Senior Notes due 2018		96,314			96,216
6.125% Senior Notes due 2021		150,000			150,000
9.0% and 9.5% Revenue Bonds		24,693			24,920
		567,257			617,136
Less: current portion		(11,445	)		(15,195	)
Long-term debt	$	555,812		$	601,941

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Discontinued Operations (Tables)

6 Months Ended

Jun. 30, 2014

Discontinued Operations And Disposal Groups [Abstract]

Summary of Results from Discontinued Operations

A summary of results from discontinued operations is as follows (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014		2013
Revenue	$	—		$	—		$	—	$	—
(Loss) income from discontinued operations, net of income taxes	$	(6	)	$	(74	)	$	31	$	(390	)

XML

Income Taxes - Additional Information (Detail)	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Income Tax Disclosure [Abstract]
Effective tax rates	39.90%	39.50%	39.00%	39.60%

XML

Property and Equipment - Summary of Property and Equipment (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 459,644	$ 399,398
Less accumulated depreciation	(40,258)	(29,289)
Property and equipment, net	419,386	370,109
Land [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	66,955	58,947
Building and Improvements [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	306,219	259,523
Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	43,020	36,742
Construction in Progress [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 43,450	$ 44,186

XML

Equity-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2014

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock Option Activity

Stock option activity during 2013 and 2014 was as follows (aggregate intrinsic value in thousands):

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Options outstanding at January 1, 2013		555,097		$	13.13		7.53	$	5,632
Options granted		411,800			30.55		9.30		2,059
Options exercised		(126,662	)		9.36		N/A		2,803
Options cancelled		(41,426	)		23.50		N/A		N/A
Options outstanding at December 31, 2013		798,809			21.93		8.20		10,700
Options granted		187,463			50.32		9.68		41
Options exercised		(141,338	)		13.45		N/A		4,126
Options cancelled		(40,789	)		31.37		N/A		N/A
Options outstanding at June 30, 2014		804,145			28.90		8.28		15,131
Options exercisable at December 31, 2013		133,647		$	11.15		4.81	$	3,472
Options exercisable at June 30, 2014		144,970		$	20.45		6.15	$	4,537

Restricted Stock Activity

Restricted stock activity during 2013 and 2014 was as follows:

	Number of Shares			Weighted Average Grant-Date Fair Value
Unvested at January 1, 2013		318,063		$	15.73
Granted		290,845			31.31
Cancelled		(53,056	)		21.27
Vested		(94,155	)		15.52
Unvested at December 31, 2013		461,697		$	24.96
Granted		227,031			49.52
Cancelled		(45,994	)		32.83
Vested		(103,966	)		23.35
Unvested at June 30, 2014		538,768		$	34.92

Restricted Stock Unit Activity

Restricted stock unit activity during 2013 and 2014 was as follows:

	Number of Units			Weighted Average Grant-Date Fair Value
Unvested at January 1, 2013		68,628		$	16.11
Granted		72,876			29.39
Cancelled		—			—
Vested		(45,753	)		16.11
Unvested at December 31, 2013		95,751		$	23.05
Granted		108,449			50.75
Cancelled		—			—
Vested		(79,087	)		21.81
Unvested at June 30, 2014		125,113		$	38.73

Schedule of Stock Options Valuation Assumptions

The following table summarizes the grant-date fair value of options and the assumptions used to develop the fair value estimates for options granted during the six months ended June 30, 2014 and year ended December 31, 2013:

	June 30, 2014			December 31, 2013
Weighted average grant-date fair value of options	$	18.07		$	11.62
Risk-free interest rate		1.7	%		1.0	%
Expected volatility		36	%		40	%
Expected life (in years)		5.5			5.5

XML

Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2014

Fair Value Disclosures [Abstract]

Carrying Amounts and Fair Values of Company's Amended and Restated Senior Credit Facilities and Contingent Consideration Liability

The carrying amounts and fair values of the Company’s Amended and Restated Senior Credit Facility, 12.875% Senior Notes, 6.125% Senior Notes, 9.0% and 9.5% Revenue Bonds, contingent consideration liability and foreign currency derivatives as of June 30, 2014 and December 31, 2013 were as follows (in thousands):

	Carrying Amount				Fair Value
	June 30, 2014		December 31, 2013		June 30, 2014		December 31, 2013
Amended and Restated Senior Credit Facility	$	296,250	$	346,000	$	296,250	$	346,000
12.875% Senior Notes due 2018	$	96,314	$	96,216	$	115,050	$	118,706
6.125% Senior Notes due 2021	$	150,000	$	150,000	$	157,125	$	155,625
9.0% and 9.5% Revenue Bonds	$	24,693	$	24,920	$	24,693	$	24,920
Contingent consideration liability	$	3,750	$	6,500	$	3,750	$	6,500
Foreign currency forward contracts	$	13,735		—	$	13,735		—

XML

Description of Business and Basis of Presentation

6 Months Ended

Jun. 30, 2014

Accounting Policies [Abstract]

Description of Business and Basis of Presentation

1. Description of Business and Basis of Presentation

Description of Business

Acadia Healthcare Company, Inc. (the “Company”) develops and operates inpatient psychiatric facilities, residential treatment centers, group homes, substance abuse facilities and facilities providing outpatient behavioral healthcare services to serve the behavioral health and recovery needs of communities throughout the United States. At June 30, 2014, the Company operated 52 behavioral healthcare facilities with over 4,400 licensed beds in 24 states and Puerto Rico. On July 1, 2014, the Company completed its acquisition of Partnerships in Care (“PiC”), which is the second largest independent provider of inpatient behavioral healthcare services in the United Kingdom, operating 23 inpatient behavioral healthcare facilities with over 1,200 beds.

Basis of Presentation

The business of the Company is conducted through limited liability companies and C-corporations, each of which is a direct or indirect wholly-owned subsidiary of the Company. The Company’s consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, all of which are 100% owned. All intercompany accounts and transactions have been eliminated in consolidation.

The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation of our financial position and results of operations have been included. The Company’s fiscal year ends on December 31 and interim results are not necessarily indicative of results for a full year or any other interim period. The condensed consolidated balance sheet at December 31, 2013 has been derived from the audited financial statements as of that date. The information contained in these condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto for the fiscal year ended December 31, 2013 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 21, 2014. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Certain reclassifications have been made to prior years to conform to the current year presentation.

XML

Financial Information for the Company and Its Subsidiaries (Tables)

6 Months Ended

Jun. 30, 2014

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Summary of Condensed Consolidating Balance Sheets

Acadia Healthcare Company, Inc.

Condensed Consolidating Balance Sheets

June 30, 2014

(In thousands) 

	Parent		Combined Subsidiary Guarantors		Combined Non- Guarantors		Consolidating Adjustments			Total Consolidated Amounts
Current assets:
Cash and cash equivalents	$	—	$	274,517	$	3,227	$	—		$	277,744
Accounts receivable, net		—		100,249		10,655		—			110,904
Deferred tax assets		—		17,841		461		(5,546	)		12,756
Other current assets		—		46,868		1,324		—			48,192
Total current assets		—		439,475		15,667		(5,546	)		449,596
Property and equipment, net		—		386,616		32,770		—			419,386
Goodwill		—		568,391		97,304		—			665,695
Intangible assets, net		—		18,862		1,990		—			20,852
Deferred tax assets – noncurrent		2,555		—		5,313		(3,641	)		4,227
Investment in subsidiaries		1,395,166		—		—		(1,395,166	)		—
Other assets		50,417		12,818		2,321		(32,760	)		32,796
Total assets	$	1,448,138	$	1,426,162	$	155,365	$	(1,437,113	)	$	1,592,552
Current liabilities:
Current portion of long-term debt	$	11,250	$	—	$	524	$	(329	)	$	11,445
Accounts payable		—		29,803		1,712		—			31,515
Accrued salaries and benefits		—		37,670		1,775		—			39,445
Other accrued liabilities		10,352		14,330		1,124		(5,546	)		20,260
Total current liabilities		21,602		81,803		5,135		(5,875	)		102,665
Long-term debt		531,314		—		56,929		(32,431	)		555,812
Deferred tax liabilities – noncurrent		—		21,535		—		(3,641	)		17,894
Other liabilities		—		20,959		—		—			20,959
Total liabilities		552,916		124,297		62,064		(41,947	)		697,330
Total equity		895,222		1,301,865		93,301		(1,395,166	)		895,222
Total liabilities and equity	$	1,448,138	$	1,426,162	$	155,365	$	(1,437,113	)	$	1,592,552

Acadia Healthcare Company, Inc.

Condensed Consolidating Balance Sheets

December 31, 2013

(In thousands)

	Parent		Combined Subsidiary Guarantors		Combined Non- Guarantors		Consolidating Adjustments			Total Consolidated Amounts
Current assets:
Cash and cash equivalents	$	—	$	—	$	6,494	$	(1,925	)	$	4,569
Accounts receivable, net		—		86,597		9,288		—			95,885
Deferred tax assets		—		15,284		419		—			15,703
Other current assets		—		27,886		1,083		—			28,969
Total current assets		—		129,767		17,284		(1,925	)		145,126
Property and equipment, net		—		340,175		29,934		—			370,109
Goodwill		—		564,539		97,010		—			661,549
Intangible assets, net		—		18,578		1,990		—			20,568
Investment in subsidiaries		1,034,160		—		—		(1,034,160	)		—
Other assets		46,236		11,675		8,082		(38,686	)		27,307
Total assets	$	1,080,396	$	1,064,734	$	154,300	$	(1,074,771	)	$	1,224,659
Current liabilities:
Current portion of long-term debt	$	15,000	$	—	$	195	$	—		$	15,195
Accounts payable		—		36,289		1,662		(1,925	)		36,026
Accrued salaries and benefits		—		36,027		1,694		—			37,721
Other accrued liabilities		4,876		19,982		890		—			25,748
Total current liabilities		19,876		92,298		4,441		(1,925	)		114,690
Long-term debt		577,216		—		57,650		(32,925	)		601,941
Deferred tax liabilities – noncurrent		2,594		11,138		—		(5,761	)		7,971
Other liabilities		—		19,347		—		—			19,347
Total liabilities		599,686		122,783		62,091		(40,611	)		743,949
Total equity		480,710		941,951		92,209		(1,034,160	)		480,710
Total liabilities and equity	$	1,080,396	$	1,064,734	$	154,300	$	(1,074,771	)	$	1,224,659

Summary of Condensed Consolidating Statement of Operations

Acadia Healthcare Company, Inc.

Condensed Consolidating Statement of Operations

Three Months Ended June 30, 2014

(In thousands)

	Parent			Combined Subsidiary Guarantors			Combined Non- Guarantors			Consolidating Adjustments			Total Consolidated Amounts
Revenue before provision for doubtful accounts	$	—		$	207,143		$	13,521		$	—		$	220,664
Provision for doubtful accounts		—			(5,954	)		(907	)		—			(6,861	)
Revenue		—			201,189			12,614			—			213,803
Salaries, wages and benefits		2,406			114,976			5,091			—			122,473
Professional fees		—			9,691			1,200			—			10,891
Supplies		—			9,967			629			—			10,596
Rents and leases		—			2,613			276			—			2,889
Other operating expenses		—			22,522			2,124			—			24,646
Depreciation and amortization		—			5,581			354			—			5,935
Interest expense, net		9,202			—			528			—			9,730
Gain on foreign currency derivatives		(13,735	)		—			—			—			(13,735	)
Transaction-related expenses		—			3,016			—			—			3,016
Total expenses		(2,127	)		168,366			10,202			—			176,441
Income from continuing operations before income taxes		2,127			32,823			2,412			—			37,362
Equity in earnings of subsidiaries		20,972			—			—			(20,972	)		—
Provision for income taxes		648			13,315			942			—			14,905
Income (loss) from continuing operations		22,451			19,508			1,470			(20,972	)		22,457
Loss from discontinued operations, net of income taxes		—			(6	)		—			—			(6	)
Net income (loss)	$	22,451		$	19,502		$	1,470		$	(20,972	)	$	22,451

Acadia Healthcare Company, Inc.

Condensed Consolidating Statement of Operations

Three Months Ended June 30, 2013

(In thousands)

	Parent			Combined Subsidiary Guarantors			Combined Non- Guarantors			Consolidating Adjustments			Total Consolidated Amounts
Revenue before provision for doubtful accounts	$	—		$	174,901			8,050		$	—		$	182,951
Provision for doubtful accounts		—			(4,922	)		(535	)		—			(5,457	)
Revenue		—			169,979			7,515			—			177,494
Salaries, wages and benefits		1,812			95,609			3,343			—			100,764
Professional fees		—			8,787			537			—			9,324
Supplies		—			9,139			474			—			9,613
Rents and leases		—			2,207			187			—			2,394
Other operating expenses		—			18,148			1,948			—			20,096
Depreciation and amortization		—			3,881			331			—			4,212
Interest expense, net		8,688			—			757			—			9,445
Transaction-related expenses		—			1,355			—			—			1,355
Total expenses		10,500			139,126			7,577			—			157,203
(Loss) income from continuing operations before income taxes		(10,500	)		30,853			(62	)		—			20,291
Equity in earnings of subsidiaries		18,500			—			—			(18,500	)		—
(Benefit from) provision for income taxes		(4,197	)		12,316			(99	)		—			8,020
Income (loss) from continuing operations		12,197			18,537			37			(18,500	)		12,271
Loss from discontinued operations, net of income taxes		—			(74	)		—			—			(74	)
Net income (loss)	$	12,197			18,463			37			(18,500	)	$	12,197

Acadia Healthcare Company, Inc.

Condensed Consolidating Statement of Operations

Six Months Ended June 30, 2014

(In thousands)

	Parent			Combined Subsidiary Guarantors			Combined Non- Guarantors			Consolidating Adjustments			Total Consolidated Amounts
Revenue before provision for doubtful accounts	$	—		$	400,425		$	26,358		$	—		$	426,783
Provision for doubtful accounts		—			(10,464	)		(1,098	)		—			(11,562	)
Revenue		—			389,961			25,260			—			415,221
Salaries, wages and benefits		4,170			225,629			10,249			—			240,048
Professional fees		—			18,944			2,329			—			21,273
Supplies		—			19,353			1,307			—			20,660
Rents and leases		—			5,108			550			—			5,658
Other operating expenses		—			43,600			4,156			—			47,756
Depreciation and amortization		—			10,666			705			—			11,371
Interest expense, net		18,313			—			1,124			—			19,437
Gain on foreign currency derivatives		(13,735	)		—			—			—			(13,735	)
Transaction-related expenses		—			4,595			—			—			4,595
Total expenses		8,748			327,895			20,420			—			357,063
(Loss) income from continuing operations before income taxes		(8,748	)		62,066			4,840			—			58,158
Equity in earnings of subsidiaries		40,839			—			—			(40,839	)		—
(Benefit from) provision for income taxes		(3,418	)		24,249			1,849			—			22,680
Income (loss) from continuing operations		35,509			37,817			2,991			(40,839	)		35,478
Income from discontinued operations, net of income taxes		—			31			—			—			31
Net income (loss)	$	35,509		$	37,848		$	2,991		$	(40,839	)	$	35,509

Acadia Healthcare Company, Inc.

Condensed Consolidating Statement of Operations

Six Months Ended June 30, 2013

(In thousands)

	Parent			Combined Subsidiary Guarantors			Combined Non- Guarantors			Consolidating Adjustments			Total Consolidated Amounts
Revenue before provision for doubtful accounts	$	—		$	336,907		$	11,749		$	—		$	348,656
Provision for doubtful accounts		—			(9,272	)		(677	)		—			(9,949	)
Revenue		—			327,635			11,072			—			338,707
Salaries, wages and benefits		2,413			187,593			5,109			—			195,115
Professional fees		—			17,494			844			—			18,338
Supplies		—			17,548			663			—			18,211
Rents and leases		—			4,478			243			—			4,721
Other operating expenses		—			34,026			3,053			—			37,079
Depreciation and amortization		—			7,307			527			—			7,834
Interest expense, net		17,028			—			1,179			—			18,207
Debt extinguishment costs		9,350			—			—			—			9,350
Transaction-related expenses		—			2,829			—			—			2,829
Total expenses		28,791			271,275			11,618			—			311,684
(Loss) income from continuing operations before income taxes		(28,791	)		56,360			(546	)		—			27,023
Equity in earnings of subsidiaries		33,253			—			—			(33,253	)		—
(Benefit from) provision for income taxes		(11,473	)		22,463			(292	)		—			10,698
Income (loss) from continuing operations		15,935			33,897			(254	)		(33,253	)		16,325
Loss from discontinued operations, net of income taxes		—			(390	)		—			—			(390	)
Net income (loss)	$	15,935		$	33,507		$	(254	)	$	(33,253	)	$	15,935

Summary of Condensed Consolidating Statement of Cash Flows

Acadia Healthcare Company, Inc.

Condensed Consolidating Statement of Cash Flows

Six Months Ended June 30, 2014

(In thousands)

	Parent			Combined Subsidiary Guarantors			Combined Non- Guarantors			Consolidating Adjustments			Total Consolidated Amounts
Operating activities:
Net income (loss)	$	35,509		$	37,848		$	2,991		$	(40,839	)	$	35,509
Adjustments to reconcile net income (loss) to net cash (used in) provided by continuing operating activities:
Equity in earnings of subsidiaries		(40,839	)		—			—			40,839			—
Depreciation and amortization		—			10,666			705			—			11,371
Amortization of debt issuance costs		1,560			—			(226	)		—			1,334
Equity-based compensation expense		4,170			—			—			—			4,170
Deferred income tax expense		5,585			3,105			407			—			9,097
Income from discontinued operations, net of taxes		—			(31	)		—			—			(31	)
Gain on foreign currency derivatives		(13,735	)		—			—			—			(13,735	)
Other		—			25			—			—			25
Change in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable, net		—			(16,670	)		1,367			—			(15,303	)
Other current assets		—			(5,033	)		241			—			(4,792	)
Other assets		165			(578	)		—			(165	)		(578	)
Accounts payable and other accrued liabilities		—			(1,584	)		284			—			(1,300	)
Accrued salaries and benefits		—			1,701			81			—			1,782
Other liabilities		—			1,701			—			—			1,701
Net cash (used in) provided by continuing operating activities		(7,585	)		31,150			5,850			(165	)		29,250
Net cash used in discontinued operating activities		—			(11	)		—			—			(11	)
Net cash (used in) provided by operating activities		(7,585	)		31,139			5,850			(165	)		29,239
Investing activities:
Cash paid for acquisitions, net of cash acquired		—			(10,000	)		—			—			(10,000	)
Cash paid for capital expenditures		—			(39,782	)		(3,541	)		—			(43,323	)
Cash paid for real estate acquisitions		—			(18,326	)		—			—			(18,326	)
Other		—			(439	)		—			—			(439	)
Net cash used in investing activities		—			(68,547	)		(3,541	)		—			(72,088	)
Financing activities:
Borrowings on long-term debt		7,500			—			—			—			7,500
Borrowings on revolving credit facility		59,500			—			—			—			59,500
Principal payments on revolving credit facility		(113,000	)		—			—			—			(113,000	)
Principal payments on long-term debt		(3,750	)		—			(165	)		165			(3,750	)
Payment of debt issuance costs		(5,810	)		—			—			—			(5,810	)
Issuance of common stock, net		374,336			—			—			—			374,336
Common stock withheld for minimum statutory taxes, net		(2,981	)		—			—			—			(2,981	)
Excess tax benefit from equity awards		3,479			—			—			—			3,479
Cash paid for contingent consideration		—			(3,250	)		—			—			(3,250	)
Cash (used in) provided by intercompany activity		(311,689	)		315,175			(5,411	)		1,925			—
Net cash provided by (used in) financing activities		7,585			311,925			(5,576	)		2,090			316,024
Net increase (decrease) in cash and cash equivalents		—			274,517			(3,267	)		1,925			273,175
Cash and cash equivalents at beginning of the period		—			—			6,494			(1,925	)		4,569
Cash and cash equivalents at end of the period	$	—		$	274,517		$	3,227		$	—		$	277,744

Acadia Healthcare Company, Inc.

Condensed Consolidating Statement of Cash Flows

Six Months Ended June 30, 2013

(In thousands)

	Parent			Combined Subsidiary Guarantors			Combined Non- Guarantors			Consolidating Adjustments			Total Consolidated Amounts
Operating activities:
Net income (loss)	$	15,935		$	33,507		$	(254	)	$	(33,253	)	$	15,935
Adjustments to reconcile net income (loss) to net cash (used in) provided by continuing operating activities:
Equity in earnings of subsidiaries		(33,253	)		—			—			33,253			—
Depreciation and amortization		—			7,307			527			—			7,834
Amortization of debt issuance costs		1,110			—			—			—			1,110
Equity-based compensation expense		2,413			—			—			—			2,413
Deferred income tax expense		108			5,011			273			—			5,392
Income from discontinued operations, net of taxes		—			390			—			—			390
Debt extinguishment costs		9,350			—			—			—			9,350
Other		—			14			—			—			14
Change in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable, net		—			(10,745	)		188			—			(10,557	)
Other current assets		—			219			(112	)		—			107
Other assets		—			(807	)		—			—			(807	)
Accounts payable and other accrued liabilities		—			1,568			(530	)		—			1,038
Accrued salaries and benefits		—			(3,073	)		(1	)		—			(3,074	)
Other liabilities		—			871			(413	)		—			458
Net cash (used in) provided by continuing operating activities		(4,337	)		34,262			(322	)		—			29,603
Net cash used in discontinued operating activities		—			(358	)		—			—			(358	)
Net cash (used in) provided by operating activities		(4,337	)		33,904			(322	)		—			29,245
Investing activities:
Cash paid for acquisitions, net of cash acquired		—			(121,731	)		—			—			(121,731	)
Cash paid for capital expenditures		—			(29,592	)		(117	)		—			(29,709	)
Cash paid for real estate acquisitions		—			(3,959	)		—			—			(3,959	)
Other		—			(554	)		—			—			(554	)
Net cash used in investing activities		—			(155,836	)		(117	)		—			(155,953	)
Financing activities:
Borrowings on long-term debt		150,000			—			—			—			150,000
Borrowings on revolving credit facility		8,000			—			—			—			8,000
Principal payments on revolving credit facility		(8,000	)		—			—			—			(8,000	)
Principal payments on long-term debt		(1,875	)		—			—			—			(1,875	)
Repayment of long-term debt		(52,500	)		—			—			—			(52,500	)
Payment of debt issuance costs		(4,307	)		—			—			—			(4,307	)
Payment of premium on note redemption		(6,759	)		—			—			—			(6,759	)
Common stock withheld for minimum statutory taxes, net		(1,062	)		—			—			—			(1,062	)
Excess tax benefit from equity awards		1,211			—			—			—			1,211
Cash (used in) provided by intercompany activity		(80,371	)		78,746			1,625			—			—
Net cash provided by (used in) financing activities		4,337			78,746			1,625			—			84,708
Net (decrease) increase in cash and cash equivalents		—			(43,186	)		1,186			—			(42,000	)
Cash and cash equivalents at beginning of the period		—			49,307			92			—			49,399
Cash and cash equivalents at end of the period	$	—		$	6,121		$	1,278		$	—		$	7,399

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Acquisitions - Pro Forma Financial Information for Acquisitions Occurred (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Business Combinations [Abstract]
Revenue	$ 286,675	$ 254,408	$ 557,568	$ 500,496
Income from continuing operations, before income taxes	$ 23,616	$ 9,924	$ 30,471	$ 6,913

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Equity-Based Compensation - Restricted Stock Activity (Detail) (Restricted Stock Award [Member], USD $)	6 Months Ended	12 Months Ended
	Jun. 30, 2014	Dec. 31, 2013
Restricted Stock Award [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unvested, Number of Shares/Units, Beginning balance	461,697	318,063
Granted, Number of Shares	227,031	290,845
Cancelled, Number of Shares	(45,994)	(53,056)
Vested, Number of Shares	(103,966)	(94,155)
Unvested, Number of Shares/Units, Ending balance	538,768	461,697
Unvested, Weighted Average Grant-Date Fair Value, Beginning balance	$ 24.96	$ 15.73
Granted, Weighted Average Grant-Date Fair Value	$ 49.52	$ 31.31
Cancelled, Weighted Average Grant-Date Fair Value	$ 32.83	$ 21.27
Vested, Weighted Average Grant-Date Fair Value	$ 23.35	$ 15.52
Unvested , Weighted Average Grant-Date Fair Value, Ending balance	$ 34.92	$ 24.96

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Condensed Consolidated Balance Sheets (Unaudited) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Current assets:
Cash and cash equivalents	$ 277,744	$ 4,569
Accounts receivable, net of allowance for doubtful accounts of $19,894 and $18,345, respectively	110,904	95,885
Deferred tax assets	12,756	15,703
Other current assets	48,192	28,969
Total current assets	449,596	145,126
Property and equipment, net	419,386	370,109
Goodwill	665,695	661,549
Intangible assets, net	20,852	20,568
Deferred tax assets - noncurrent	4,227	0
Other assets	32,796	27,307
Total assets	1,592,552	1,224,659
Current liabilities:
Current portion of long-term debt	11,445	15,195
Accounts payable	31,515	36,026
Accrued salaries and benefits	39,445	37,721
Other accrued liabilities	20,260	25,748
Total current liabilities	102,665	114,690
Long-term debt	555,812	601,941
Deferred tax liabilities - noncurrent	17,894	7,971
Other liabilities	20,959	19,347
Total liabilities	697,330	743,949
Equity:
Preferred stock, $0.01 par value; 10,000,000 shares authorized, no shares issued	0	0
Common stock, $0.01 par value; 90,000,000 shares authorized; 59,161,654 and 50,070,980 issued and outstanding as of June 30, 2014 and December 31, 2013, respectively	592	501
Additional paid-in capital	840,719	461,807
Retained earnings	53,911	18,402
Total equity	895,222	480,710
Total liabilities and equity	$ 1,592,552	$ 1,224,659

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Discontinued Operations - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	1 Months Ended
	Jun. 30, 2012
Discontinued Operations And Disposal Groups [Abstract]
Loss on disposal of entity	$ 0.2

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Condensed Consolidated Statement of Equity (Unaudited) (USD $) In Thousands, except Share data	Total	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]
Balance at Dec. 31, 2013	$ 480,710	$ 501	$ 461,807	$ 18,402
Balance, shares at Dec. 31, 2013		50,071,000
Common stock issued under stock incentive plans	570	2	568
Common stock issued under stock incentive plans, shares , shares	141,338	209,000
Common stock withheld for minimum statutory taxes	(3,552)		(3,552)
Equity-based compensation expense	4,170		4,170
Excess tax benefit from equity awards	3,479		3,479
Issuance of common stock, net	374,336	89	374,247
Issuance of common stock, net, shares		8,882,000
Net income	35,509			35,509
Balance at Jun. 30, 2014	$ 895,222	$ 592	$ 840,719	$ 53,911
Balance, shares at Jun. 30, 2014		59,162,000

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Fair Value Measurements - Additional Information (Detail) (USD $)	6 Months Ended			3 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013	Jun. 30, 2014 Park Royal [Member]	Jun. 30, 2014 12.875% Senior Notes Due 2018 [Member]	Dec. 31, 2013 12.875% Senior Notes Due 2018 [Member]	Jun. 30, 2014 6.125% Senior Notes Due 2021 [Member]	Dec. 31, 2013 6.125% Senior Notes Due 2021 [Member]	Jun. 30, 2014 9.0% Revenue Bonds [Member]	Dec. 31, 2013 9.0% Revenue Bonds [Member]	Nov. 11, 2012 9.0% Revenue Bonds [Member] Park Royal [Member]	Jun. 30, 2014 9.5% Revenue Bonds [Member]	Dec. 31, 2013 9.5% Revenue Bonds [Member]	Nov. 11, 2012 9.5% Revenue Bonds [Member] Park Royal [Member]
Disclosures Regarding Financial Instruments [Line Items]
Debt instrument interest rate					12.875%	12.875%	6.125%	6.125%	9.00%	9.00%	9.00%	9.50%	9.50%	9.50%
Increase in fair value of contingent consideration liability	$ 500,000
Contingent consideration, Paid	3,250,000	0		3,300,000
Contingent consideration liability	$ 3,750,000		$ 6,500,000	$ 7,000,000

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Earnings Per Share - Additional Information (Detail) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Earnings Per Share [Abstract]
Excluded common stock for computation of diluted earnings per share	0.6	0.4	0.5	0.7

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Financial Information for the Company and Its Subsidiaries

6 Months Ended

Jun. 30, 2014

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Financial Information for the Company and Its Subsidiaries

15. Financial Information for the Company and Its Subsidiaries

The Company conducts substantially all of its business through its subsidiaries. The 12.875% Senior Notes and 6.125% Senior Notes are jointly and severally guaranteed on an unsecured senior basis by all of the Company’s subsidiaries that guarantee the Company’s obligations under the Amended and Restated Credit Facility. Presented below is condensed consolidating financial information for the Company and its subsidiaries as of June 30, 2014 and December 31, 2013, and for the three and six months ended June 30, 2014 and 2013. The information segregates the parent company (Acadia Healthcare Company, Inc.), the combined wholly-owned subsidiary guarantors, the combined non-guarantor subsidiaries and eliminations.

Acadia Healthcare Company, Inc.

Condensed Consolidating Balance Sheets

June 30, 2014

(In thousands) 

	Parent		Combined Subsidiary Guarantors		Combined Non- Guarantors		Consolidating Adjustments			Total Consolidated Amounts
Current assets:
Cash and cash equivalents	$	—	$	274,517	$	3,227	$	—		$	277,744
Accounts receivable, net		—		100,249		10,655		—			110,904
Deferred tax assets		—		17,841		461		(5,546	)		12,756
Other current assets		—		46,868		1,324		—			48,192
Total current assets		—		439,475		15,667		(5,546	)		449,596
Property and equipment, net		—		386,616		32,770		—			419,386
Goodwill		—		568,391		97,304		—			665,695
Intangible assets, net		—		18,862		1,990		—			20,852
Deferred tax assets – noncurrent		2,555		—		5,313		(3,641	)		4,227
Investment in subsidiaries		1,395,166		—		—		(1,395,166	)		—
Other assets		50,417		12,818		2,321		(32,760	)		32,796
Total assets	$	1,448,138	$	1,426,162	$	155,365	$	(1,437,113	)	$	1,592,552
Current liabilities:
Current portion of long-term debt	$	11,250	$	—	$	524	$	(329	)	$	11,445
Accounts payable		—		29,803		1,712		—			31,515
Accrued salaries and benefits		—		37,670		1,775		—			39,445
Other accrued liabilities		10,352		14,330		1,124		(5,546	)		20,260
Total current liabilities		21,602		81,803		5,135		(5,875	)		102,665
Long-term debt		531,314		—		56,929		(32,431	)		555,812
Deferred tax liabilities – noncurrent		—		21,535		—		(3,641	)		17,894
Other liabilities		—		20,959		—		—			20,959
Total liabilities		552,916		124,297		62,064		(41,947	)		697,330
Total equity		895,222		1,301,865		93,301		(1,395,166	)		895,222
Total liabilities and equity	$	1,448,138	$	1,426,162	$	155,365	$	(1,437,113	)	$	1,592,552

Acadia Healthcare Company, Inc.

Condensed Consolidating Balance Sheets

December 31, 2013

(In thousands)

	Parent		Combined Subsidiary Guarantors		Combined Non- Guarantors		Consolidating Adjustments			Total Consolidated Amounts
Current assets:
Cash and cash equivalents	$	—	$	—	$	6,494	$	(1,925	)	$	4,569
Accounts receivable, net		—		86,597		9,288		—			95,885
Deferred tax assets		—		15,284		419		—			15,703
Other current assets		—		27,886		1,083		—			28,969
Total current assets		—		129,767		17,284		(1,925	)		145,126
Property and equipment, net		—		340,175		29,934		—			370,109
Goodwill		—		564,539		97,010		—			661,549
Intangible assets, net		—		18,578		1,990		—			20,568
Investment in subsidiaries		1,034,160		—		—		(1,034,160	)		—
Other assets		46,236		11,675		8,082		(38,686	)		27,307
Total assets	$	1,080,396	$	1,064,734	$	154,300	$	(1,074,771	)	$	1,224,659
Current liabilities:
Current portion of long-term debt	$	15,000	$	—	$	195	$	—		$	15,195
Accounts payable		—		36,289		1,662		(1,925	)		36,026
Accrued salaries and benefits		—		36,027		1,694		—			37,721
Other accrued liabilities		4,876		19,982		890		—			25,748
Total current liabilities		19,876		92,298		4,441		(1,925	)		114,690
Long-term debt		577,216		—		57,650		(32,925	)		601,941
Deferred tax liabilities – noncurrent		2,594		11,138		—		(5,761	)		7,971
Other liabilities		—		19,347		—		—			19,347
Total liabilities		599,686		122,783		62,091		(40,611	)		743,949
Total equity		480,710		941,951		92,209		(1,034,160	)		480,710
Total liabilities and equity	$	1,080,396	$	1,064,734	$	154,300	$	(1,074,771	)	$	1,224,659

Acadia Healthcare Company, Inc.

Condensed Consolidating Statement of Operations

Three Months Ended June 30, 2014

(In thousands)

	Parent			Combined Subsidiary Guarantors			Combined Non- Guarantors			Consolidating Adjustments			Total Consolidated Amounts
Revenue before provision for doubtful accounts	$	—		$	207,143		$	13,521		$	—		$	220,664
Provision for doubtful accounts		—			(5,954	)		(907	)		—			(6,861	)
Revenue		—			201,189			12,614			—			213,803
Salaries, wages and benefits		2,406			114,976			5,091			—			122,473
Professional fees		—			9,691			1,200			—			10,891
Supplies		—			9,967			629			—			10,596
Rents and leases		—			2,613			276			—			2,889
Other operating expenses		—			22,522			2,124			—			24,646
Depreciation and amortization		—			5,581			354			—			5,935
Interest expense, net		9,202			—			528			—			9,730
Gain on foreign currency derivatives		(13,735	)		—			—			—			(13,735	)
Transaction-related expenses		—			3,016			—			—			3,016
Total expenses		(2,127	)		168,366			10,202			—			176,441
Income from continuing operations before income taxes		2,127			32,823			2,412			—			37,362
Equity in earnings of subsidiaries		20,972			—			—			(20,972	)		—
Provision for income taxes		648			13,315			942			—			14,905
Income (loss) from continuing operations		22,451			19,508			1,470			(20,972	)		22,457
Loss from discontinued operations, net of income taxes		—			(6	)		—			—			(6	)
Net income (loss)	$	22,451		$	19,502		$	1,470		$	(20,972	)	$	22,451

Acadia Healthcare Company, Inc.

Condensed Consolidating Statement of Operations

Three Months Ended June 30, 2013

(In thousands)

	Parent			Combined Subsidiary Guarantors			Combined Non- Guarantors			Consolidating Adjustments			Total Consolidated Amounts
Revenue before provision for doubtful accounts	$	—		$	174,901			8,050		$	—		$	182,951
Provision for doubtful accounts		—			(4,922	)		(535	)		—			(5,457	)
Revenue		—			169,979			7,515			—			177,494
Salaries, wages and benefits		1,812			95,609			3,343			—			100,764
Professional fees		—			8,787			537			—			9,324
Supplies		—			9,139			474			—			9,613
Rents and leases		—			2,207			187			—			2,394
Other operating expenses		—			18,148			1,948			—			20,096
Depreciation and amortization		—			3,881			331			—			4,212
Interest expense, net		8,688			—			757			—			9,445
Transaction-related expenses		—			1,355			—			—			1,355
Total expenses		10,500			139,126			7,577			—			157,203
(Loss) income from continuing operations before income taxes		(10,500	)		30,853			(62	)		—			20,291
Equity in earnings of subsidiaries		18,500			—			—			(18,500	)		—
(Benefit from) provision for income taxes		(4,197	)		12,316			(99	)		—			8,020
Income (loss) from continuing operations		12,197			18,537			37			(18,500	)		12,271
Loss from discontinued operations, net of income taxes		—			(74	)		—			—			(74	)
Net income (loss)	$	12,197			18,463			37			(18,500	)	$	12,197

Acadia Healthcare Company, Inc.

Condensed Consolidating Statement of Operations

Six Months Ended June 30, 2014

(In thousands)

	Parent			Combined Subsidiary Guarantors			Combined Non- Guarantors			Consolidating Adjustments			Total Consolidated Amounts
Revenue before provision for doubtful accounts	$	—		$	400,425		$	26,358		$	—		$	426,783
Provision for doubtful accounts		—			(10,464	)		(1,098	)		—			(11,562	)
Revenue		—			389,961			25,260			—			415,221
Salaries, wages and benefits		4,170			225,629			10,249			—			240,048
Professional fees		—			18,944			2,329			—			21,273
Supplies		—			19,353			1,307			—			20,660
Rents and leases		—			5,108			550			—			5,658
Other operating expenses		—			43,600			4,156			—			47,756
Depreciation and amortization		—			10,666			705			—			11,371
Interest expense, net		18,313			—			1,124			—			19,437
Gain on foreign currency derivatives		(13,735	)		—			—			—			(13,735	)
Transaction-related expenses		—			4,595			—			—			4,595
Total expenses		8,748			327,895			20,420			—			357,063
(Loss) income from continuing operations before income taxes		(8,748	)		62,066			4,840			—			58,158
Equity in earnings of subsidiaries		40,839			—			—			(40,839	)		—
(Benefit from) provision for income taxes		(3,418	)		24,249			1,849			—			22,680
Income (loss) from continuing operations		35,509			37,817			2,991			(40,839	)		35,478
Income from discontinued operations, net of income taxes		—			31			—			—			31
Net income (loss)	$	35,509		$	37,848		$	2,991		$	(40,839	)	$	35,509

Acadia Healthcare Company, Inc.

Condensed Consolidating Statement of Operations

Six Months Ended June 30, 2013

(In thousands)

	Parent			Combined Subsidiary Guarantors			Combined Non- Guarantors			Consolidating Adjustments			Total Consolidated Amounts
Revenue before provision for doubtful accounts	$	—		$	336,907		$	11,749		$	—		$	348,656
Provision for doubtful accounts		—			(9,272	)		(677	)		—			(9,949	)
Revenue		—			327,635			11,072			—			338,707
Salaries, wages and benefits		2,413			187,593			5,109			—			195,115
Professional fees		—			17,494			844			—			18,338
Supplies		—			17,548			663			—			18,211
Rents and leases		—			4,478			243			—			4,721
Other operating expenses		—			34,026			3,053			—			37,079
Depreciation and amortization		—			7,307			527			—			7,834
Interest expense, net		17,028			—			1,179			—			18,207
Debt extinguishment costs		9,350			—			—			—			9,350
Transaction-related expenses		—			2,829			—			—			2,829
Total expenses		28,791			271,275			11,618			—			311,684
(Loss) income from continuing operations before income taxes		(28,791	)		56,360			(546	)		—			27,023
Equity in earnings of subsidiaries		33,253			—			—			(33,253	)		—
(Benefit from) provision for income taxes		(11,473	)		22,463			(292	)		—			10,698
Income (loss) from continuing operations		15,935			33,897			(254	)		(33,253	)		16,325
Loss from discontinued operations, net of income taxes		—			(390	)		—			—			(390	)
Net income (loss)	$	15,935		$	33,507		$	(254	)	$	(33,253	)	$	15,935

Acadia Healthcare Company, Inc.

Condensed Consolidating Statement of Cash Flows

Six Months Ended June 30, 2014

(In thousands)

	Parent			Combined Subsidiary Guarantors			Combined Non- Guarantors			Consolidating Adjustments			Total Consolidated Amounts
Operating activities:
Net income (loss)	$	35,509		$	37,848		$	2,991		$	(40,839	)	$	35,509
Adjustments to reconcile net income (loss) to net cash (used in) provided by continuing operating activities:
Equity in earnings of subsidiaries		(40,839	)		—			—			40,839			—
Depreciation and amortization		—			10,666			705			—			11,371
Amortization of debt issuance costs		1,560			—			(226	)		—			1,334
Equity-based compensation expense		4,170			—			—			—			4,170
Deferred income tax expense		5,585			3,105			407			—			9,097
Income from discontinued operations, net of taxes		—			(31	)		—			—			(31	)
Gain on foreign currency derivatives		(13,735	)		—			—			—			(13,735	)
Other		—			25			—			—			25
Change in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable, net		—			(16,670	)		1,367			—			(15,303	)
Other current assets		—			(5,033	)		241			—			(4,792	)
Other assets		165			(578	)		—			(165	)		(578	)
Accounts payable and other accrued liabilities		—			(1,584	)		284			—			(1,300	)
Accrued salaries and benefits		—			1,701			81			—			1,782
Other liabilities		—			1,701			—			—			1,701
Net cash (used in) provided by continuing operating activities		(7,585	)		31,150			5,850			(165	)		29,250
Net cash used in discontinued operating activities		—			(11	)		—			—			(11	)
Net cash (used in) provided by operating activities		(7,585	)		31,139			5,850			(165	)		29,239
Investing activities:
Cash paid for acquisitions, net of cash acquired		—			(10,000	)		—			—			(10,000	)
Cash paid for capital expenditures		—			(39,782	)		(3,541	)		—			(43,323	)
Cash paid for real estate acquisitions		—			(18,326	)		—			—			(18,326	)
Other		—			(439	)		—			—			(439	)
Net cash used in investing activities		—			(68,547	)		(3,541	)		—			(72,088	)
Financing activities:
Borrowings on long-term debt		7,500			—			—			—			7,500
Borrowings on revolving credit facility		59,500			—			—			—			59,500
Principal payments on revolving credit facility		(113,000	)		—			—			—			(113,000	)
Principal payments on long-term debt		(3,750	)		—			(165	)		165			(3,750	)
Payment of debt issuance costs		(5,810	)		—			—			—			(5,810	)
Issuance of common stock, net		374,336			—			—			—			374,336
Common stock withheld for minimum statutory taxes, net		(2,981	)		—			—			—			(2,981	)
Excess tax benefit from equity awards		3,479			—			—			—			3,479
Cash paid for contingent consideration		—			(3,250	)		—			—			(3,250	)
Cash (used in) provided by intercompany activity		(311,689	)		315,175			(5,411	)		1,925			—
Net cash provided by (used in) financing activities		7,585			311,925			(5,576	)		2,090			316,024
Net increase (decrease) in cash and cash equivalents		—			274,517			(3,267	)		1,925			273,175
Cash and cash equivalents at beginning of the period		—			—			6,494			(1,925	)		4,569
Cash and cash equivalents at end of the period	$	—		$	274,517		$	3,227		$	—		$	277,744

Acadia Healthcare Company, Inc.

Condensed Consolidating Statement of Cash Flows

Six Months Ended June 30, 2013

(In thousands)

	Parent			Combined Subsidiary Guarantors			Combined Non- Guarantors			Consolidating Adjustments			Total Consolidated Amounts
Operating activities:
Net income (loss)	$	15,935		$	33,507		$	(254	)	$	(33,253	)	$	15,935
Adjustments to reconcile net income (loss) to net cash (used in) provided by continuing operating activities:
Equity in earnings of subsidiaries		(33,253	)		—			—			33,253			—
Depreciation and amortization		—			7,307			527			—			7,834
Amortization of debt issuance costs		1,110			—			—			—			1,110
Equity-based compensation expense		2,413			—			—			—			2,413
Deferred income tax expense		108			5,011			273			—			5,392
Income from discontinued operations, net of taxes		—			390			—			—			390
Debt extinguishment costs		9,350			—			—			—			9,350
Other		—			14			—			—			14
Change in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable, net		—			(10,745	)		188			—			(10,557	)
Other current assets		—			219			(112	)		—			107
Other assets		—			(807	)		—			—			(807	)
Accounts payable and other accrued liabilities		—			1,568			(530	)		—			1,038
Accrued salaries and benefits		—			(3,073	)		(1	)		—			(3,074	)
Other liabilities		—			871			(413	)		—			458
Net cash (used in) provided by continuing operating activities		(4,337	)		34,262			(322	)		—			29,603
Net cash used in discontinued operating activities		—			(358	)		—			—			(358	)
Net cash (used in) provided by operating activities		(4,337	)		33,904			(322	)		—			29,245
Investing activities:
Cash paid for acquisitions, net of cash acquired		—			(121,731	)		—			—			(121,731	)
Cash paid for capital expenditures		—			(29,592	)		(117	)		—			(29,709	)
Cash paid for real estate acquisitions		—			(3,959	)		—			—			(3,959	)
Other		—			(554	)		—			—			(554	)
Net cash used in investing activities		—			(155,836	)		(117	)		—			(155,953	)
Financing activities:
Borrowings on long-term debt		150,000			—			—			—			150,000
Borrowings on revolving credit facility		8,000			—			—			—			8,000
Principal payments on revolving credit facility		(8,000	)		—			—			—			(8,000	)
Principal payments on long-term debt		(1,875	)		—			—			—			(1,875	)
Repayment of long-term debt		(52,500	)		—			—			—			(52,500	)
Payment of debt issuance costs		(4,307	)		—			—			—			(4,307	)
Payment of premium on note redemption		(6,759	)		—			—			—			(6,759	)
Common stock withheld for minimum statutory taxes, net		(1,062	)		—			—			—			(1,062	)
Excess tax benefit from equity awards		1,211			—			—			—			1,211
Cash (used in) provided by intercompany activity		(80,371	)		78,746			1,625			—			—
Net cash provided by (used in) financing activities		4,337			78,746			1,625			—			84,708
Net (decrease) increase in cash and cash equivalents		—			(43,186	)		1,186			—			(42,000	)
Cash and cash equivalents at beginning of the period		—			49,307			92			—			49,399
Cash and cash equivalents at end of the period	$	—		$	6,121		$	1,278		$	—		$	7,399

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

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include any statements that address future results or occurrences. In some cases you can identify forward-looking statements by terminology such as “may,” “might,” “will,” “would,” “should,” “could” or the negative thereof. Generally, the words “anticipate,” “believe,” “continue,” “expect,” “intend,” “estimate,” “project,” “plan” and similar expressions identify forward-looking statements. In particular, statements about our expectations, beliefs, plans, objectives, assumptions or future events or performance contained are forward-looking statements.

We have based these forward-looking statements on our current expectations, assumptions, estimates and projections. While we believe these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks, uncertainties and other factors, many of which are outside of our control, which could cause our actual results, performance or achievements to differ materially from any results, performance or achievements expressed or implied by such forward-looking statements. These risks, uncertainties and other factors include, but are not limited to:

• our significant indebtedness, our ability to meet our debt obligations, and our ability to incur substantially more debt;

• difficulties in successfully integrating the operations of acquired facilities, including those acquired in the Partnerships in Care acquisition, or realizing the potential benefits and synergies of these acquisitions;

• our ability to implement our business strategies in the United Kingdom and adapt to the regulatory and business environment in the United Kingdom;

• the impact of payments received from the government and third-party payors on our revenues and results of operations including the significant dependence of the Partnerships in Care facilities on payments received from the National Health Service in the United Kingdom;

• negative media coverage relating to patient incidents, which could adversely affect the price of our securities and result in incremental regulatory burdens and governmental investigations;

• our future cash flow and earnings;

• our restrictive covenants, which may restrict our business and financing activities;

• our ability to make payments on our financing arrangements;

• the impact of the economic and employment conditions in the United States and the United Kingdom on our business and future results of operations;

• compliance with laws and government regulations;

• the impact of claims brought against our facilities;

• the impact of governmental investigations, regulatory actions and whistleblower lawsuits;

• the impact of healthcare reform in the United States and abroad;

• the impact of our highly competitive industry on patient volumes;

• our ability to recruit and retain quality psychiatrists and other physicians;

• the impact of competition for staffing on our labor costs and profitability;

• our dependence on key management personnel, key executives and local facility management personnel;

• our acquisition strategy, which exposes us to a variety of operational and financial risks, as well as legal and regulatory risks (e.g., exposure to the new regulatory regimes such as the United Kingdom for Partnerships in Care);

• the impact of state efforts to regulate the construction or expansion of healthcare facilities (including those from Partnerships in Care) on our ability to operate and expand our operations;

• our potential inability to extend leases at expiration;

• the impact of controls designed to reduce inpatient services on our revenues;

• the impact of different interpretations of accounting principles on our results of operations or financial condition;

• the impact of environmental, health and safety laws and regulations, especially in states where we have concentrated operations;

• the impact of an increase in uninsured and underinsured patients or the deterioration in the collectability of the accounts of such patients on our results of operations;

• the risk of a cyber-security incident and any resulting violation of laws and regulations regarding information privacy or other negative impact;

• the impact of laws and regulations relating to privacy and security of patient health information and standards for electronic transactions;

• the impact of a change in the mix of our earnings, and changes in tax rates and laws generally;

• failure to maintain effective internal control over financial reporting;

• the impact of fluctuations in our operating results, quarter to quarter earnings and other factors on the price of our securities;

• the impact of our equity sponsor’s rights over certain company matters;

• the impact of the trend for insurance companies and managed care organizations to enter into sole source contracts on our ability to obtain patients; and

• those risks and uncertainties described from time to time in our filings with the Securities and Exchange Commission.

Given these risks and uncertainties, you are cautioned not to place undue reliance on such forward-looking statements. These risks and uncertainties may cause our actual future results to be materially different than those expressed in our forward-looking statements. These forward-looking statements are made only as of the date of this Quarterly Report on Form 10-Q. We do not undertake and specifically decline any obligation to update any such statements or to publicly announce the results of any revisions to any such statements to reflect future events or developments.

Overview

Our business strategy is to acquire and develop inpatient behavioral healthcare facilities and improve our operating results within our inpatient facilities and our other behavioral healthcare operations. We strive to improve the operating results of our facilities by providing high quality services, expanding referral networks and marketing initiatives while meeting the increased demand for behavioral healthcare services through expansion of our current locations as well as developing new services within existing locations. At June 30, 2014, we operated 52 behavioral healthcare facilities with over 4,400 licensed beds in 24 states and Puerto Rico. During the six months ended June 30, 2014, we acquired one facility and added 228 new beds to our existing facilities. We expect to add over 300 total beds for the year ending December 31, 2014 (exclusive of acquisitions).

We are the leading publicly traded pure-play provider of inpatient behavioral healthcare services based upon number of licensed beds in the United States. Management believes that the Company’s recent acquisitions described below position the Company as a leading platform in a highly fragmented industry under the direction of an experienced management team that has significant industry expertise. Management expects to take advantage of several strategies that are more accessible as a result of our increased size and geographic scale, including continuing a national marketing strategy to attract new patients and referral sources, increasing our volume of out-of-state referrals, providing a broader range of services to new and existing patients and clients and selectively pursuing opportunities to expand our facility and bed count.

Acquisitions

On July 1, 2014, we completed the acquisition of PiC for net cash consideration of $662.0 million, which is net of cash acquired of $12.0 million and the gain on settlement of the foreign currency derivatives of $15.3 million. The Company used $300.0 million of proceeds from the offering of the 5.125% Senior Notes completed on July 1, 2014, $374.3 million of proceeds from the June 2014 sale of Acadia common stock and borrowings under the Company’s Amended and Restated Senior Secured Credit Facility to fund the acquisition. PiC is the second largest independent provider of inpatient behavioral healthcare services in the United Kingdom, operating 23 inpatient behavioral healthcare facilities with over 1,200 beds.

On January 1, 2014, we completed the acquisition of the assets of Pacific Grove, an inpatient psychiatric facility with 68 licensed beds located in Riverside, California, for cash consideration of $10.5 million.

Revenue

Our revenue is primarily derived from services rendered to patients for inpatient psychiatric and substance abuse care, outpatient psychiatric care and adolescent residential treatment. We receive payments from the following sources for services rendered in our facilities: (i) state governments under their respective Medicaid and other programs; (ii) commercial insurers; (iii) the federal government under the Medicare program administered by CMS; and (iv) individual patients and clients. Revenue is recorded in the period in which services are provided at established billing rates less contractual adjustments based on amounts reimbursable by Medicare or Medicaid under provisions of cost or prospective reimbursement formulas or amounts due from other third-party payors at contractually determined rates. Following the acquisition of PiC on July 1, 2014, our revenue will also be derived from the National Health Service in the United Kingdom.

The following table presents revenue by payor type and as a percentage of revenue before provision for doubtful accounts for the three and six months ended June 30, 2014 and 2013 (in thousands):

	Three Months Ended June 30,												Six Months Ended June 30,
	2014						2013						2014						2013
	Amount			%			Amount			%			Amount			%			Amount			%
Self-Pay	$	6,207			2.8	%	$	4,766			2.6	%	$	13,214			3.1	%	$	8,450			2.4	%
Commercial		58,429			26.5	%		46,019			25.2	%		114,614			26.8	%		88,394			25.4	%
Medicare		48,581			22.0	%		38,854			21.2	%		94,267			22.1	%		71,301			20.5	%
Medicaid		101,546			46.0	%		89,197			48.8	%		193,316			45.3	%		172,390			49.4	%
Other		5,901			2.7	%		4,115			2.2	%		11,372			2.7	%		8,121			2.3	%
Revenue before provision for doubtful accounts		220,664			100.0	%		182,951			100.0	%		426,783			100.0	%		348,656			100.0	%
Provision for doubtful accounts		(6,861	)					(5,457	)					(11,562	)					(9,949	)
Revenue	$	213,803					$	177,494					$	415,221					$	338,707

The following tables present a summary of our aging of accounts receivable as of June 30, 2014 and December 31, 2013:

June 30, 2014

	Current			30-90			90-150			>150			Total
Self-Pay		1.0	%		2.3	%		2.5	%		5.0	%		10.8	%
Commercial		15.1	%		6.2	%		3.1	%		3.3	%		27.7	%
Medicare		16.9	%		4.5	%		1.8	%		3.3	%		26.5	%
Medicaid		24.6	%		5.4	%		2.1	%		2.9	%		35.0	%
Total		57.6	%		18.4	%		9.5	%		14.5	%		100.0	%

December 31, 2013

	Current			30-90			90-150			>150			Total
Self-Pay		2.4	%		2.5	%		2.6	%		4.8	%		12.3	%
Commercial		14.7	%		7.0	%		2.6	%		2.6	%		26.9	%
Medicare		18.1	%		5.1	%		2.1	%		4.0	%		29.3	%
Medicaid		21.3	%		5.6	%		2.1	%		2.5	%		31.5	%
Total		56.5	%		20.2	%		9.4	%		13.9	%		100.0	%

Results of Operations

The following table illustrates our consolidated results of operations from continuing operations for the respective periods shown (dollars in thousands):

	Three Months Ended June 30,												Six Months Ended June 30,
	2014						2013						2014						2013
	Amount			%			Amount			%			Amount			%			Amount			%
Revenue before provision for doubtful accounts	$	220,664					$	182,951					$	426,783					$	348,656
Provision for doubtful accounts		(6,861	)					(5,457	)					(11,562	)					(9,949	)
Revenue		213,803			100.0	%		177,494			100.0	%		415,221			100.0	%		338,707			100.0	%
Salaries, wages and benefits		122,473			57.3	%		100,764			56.8	%		240,048			57.8	%		195,115			57.6	%
Professional fees		10,891			5.1	%		9,324			5.3	%		21,273			5.1	%		18,338			5.4	%
Supplies		10,596			5.0	%		9,613			5.4	%		20,660			5.0	%		18,211			5.4	%
Rents and leases		2,889			1.3	%		2,394			1.3	%		5,658			1.4	%		4,721			1.4	%
Other operating expenses		24,646			11.5	%		20,096			11.3	%		47,756			11.5	%		37,079			10.9	%
Depreciation and amortization		5,935			2.8	%		4,212			2.4	%		11,371			2.7	%		7,834			2.3	%
Interest expense		9,730			4.5	%		9,445			5.3	%		19,437			4.7	%		18,207			5.4	%
Gain on foreign currency derivatives		(13,735	)		(6.4	)%		—			—			(13,735	)		(3.3	)%		—			—
Debt extinguishment costs		—			—			—			—			—			—	%		9,350			2.8
Transaction-related expenses		3,016			1.4	%		1,355			0.8	%		4,595			1.1	%		2,829			0.8	%
Total expenses		176,441			82.5	%		157,203			88.6	%		357,063			86.0	%		311,684			92.0	%
Income from continuing operations before income taxes		37,362			17.5	%		20,291			11.4	%		58,158			14.0	%		27,023			8.0	%
Provision for income taxes		14,905			7.0	%		8,020			4.5	%		22,680			5.5	%		10,698			3.2	%
Income from continuing operations	$	22,457			10.5	%	$	12,271			6.9	%	$	35,478			8.5	%	$	16,325			4.8	%

Three months ended June 30, 2014 compared to the three months ended June 30, 2013

Revenue before provision for doubtful accounts. Revenue before provision for doubtful accounts increased $37.7 million, or 20.6%, to $220.7 million for the three months ended June 30, 2014 from $183.0 million for the three months ended June 30, 2013. The increase related primarily to revenue generated during the three months ended June 30, 2014 from the facilities acquired in our 2013 and 2014 Acquisitions. Same-facility revenue before provision for doubtful accounts increased by $20.8 million, or 11.4%, for the three months ended June 30, 2014 compared to the three months ended June 30, 2013, resulting from same-facility growth in patient days of 10.6% and same-facility revenue per day of 0.8%. Consistent with the same-facility patient day growth in 2013, the growth in same-facility patient days for the three months ended June 30, 2014 compared to the three months ended June 30, 2013 resulted from the addition of beds to our existing facilities and ongoing demand for our services.

Provision for doubtful accounts. The provision for doubtful accounts was $6.9 million for the three months ended June 30, 2014, or 3.1% of revenue before provision for doubtful accounts, compared to $5.5 million for the three months ended June 30, 2013, or 3.0% of revenue before provision for doubtful accounts. The same-facility provision for doubtful accounts was $6.1 million for the three months ended June 30, 2014, or 3.0% of revenue before provision for doubtful accounts, compared to $5.5 million for the three months ended June 30, 2013, or 3.0% of revenue before provision for doubtful accounts.

Salaries, wages and benefits. Salaries, wages and benefits (“SWB”) expense was $122.5 million for the three months ended June 30, 2014 compared to $100.8 million for the three months ended June 30, 2013, an increase of $21.7 million. SWB expense included $2.4 million and $1.8 million of equity-based compensation expense for the three months ended June 30, 2014 and 2013, respectively. Excluding equity-based compensation expense, SWB expense was $120.1 million, or 56.2% of revenue, for the three months ended June 30, 2014, compared to $99.0 million, or 55.7% of revenue, for the three months ended June 30, 2013. The $21.1 million increase in SWB expense, excluding equity-based compensation expense, was primarily attributable to SWB expense incurred by the facilities acquired in our 2013 and 2014 Acquisitions. Same-facility SWB expense was $102.9 million for the three months ended June 30, 2014, or 52.3% of revenue, compared to $93.7 million for the three months ended June 30, 2013, or 53.0% of revenue.

Professional fees. Professional fees were $10.9 million for the three months ended June 30, 2014, or 5.1% of revenue, compared to $9.3 million for the three months ended June 30, 2013, or 5.3% of revenue. The $1.6 million increase was primarily attributable to professional fees incurred by the facilities acquired in our 2013 and 2014 Acquisitions. Same-facility professional fees were $8.6 million for the three months ended June 30, 2014, or 4.4% of revenue, compared to $7.7 million, for the three months ended June 30, 2013, or 4.4% of revenue.

Supplies. Supplies expense was $10.6 million for the three months ended June 30, 2014, or 5.0% of revenue, compared to $9.6 million for the three months ended June 30, 2013, or 5.4% of revenue. The $1.0 million increase was primarily attributable to supplies expense incurred by the facilities acquired in our 2013 and 2014 Acquisitions. Same-facility supplies expense was $9.7 million for the three months ended June 30, 2014, or 4.9% of revenue, compared to $9.6 million for the three months ended June 30, 2013, or 5.4% of revenue.

Rents and leases. Rents and leases were $2.9 million for the three months ended June 30, 2014, or 1.3% of revenue, compared to $2.4 million for the three months ended June 30, 2013, or 1.3% of revenue. The $0.5 million increase was primarily attributable to rents and leases incurred by the facilities acquired in our 2013 and 2014 Acquisitions. Same-facility rents and leases were $2.6 million for the three months ended June 30, 2014, or 1.3% of revenue, compared to $2.3 million for the three months ended June 30, 2013, or 1.3% of revenue.

Other operating expenses. Other operating expenses consisted primarily of purchased services, utilities, insurance, travel and repairs and maintenance expenses. Other operating expenses were $24.6 million for the three months ended June 30, 2014, or 11.5% of revenue, compared to $20.1 million for the three months ended June 30, 2013, or 11.3% of revenue. The $4.5 million increase was primarily attributable to other operating expenses incurred by the facilities acquired in our 2013 and 2014 Acquisitions. Same-facility other operating expenses were $21.4 million for the three months ended June 30, 2014, or 10.9% of revenue, compared to $19.6 million for the three months ended June 30, 2013, or 11.1% of revenue.

Depreciation and amortization. Depreciation and amortization expense was $5.9 million for the three months ended June 30, 2014, or 2.8% of revenue, compared to $4.2 million for the three months ended June 30, 2013, or 2.4% of revenue. The increase in depreciation and amortization was attributable to depreciation associated with capital expenditures during 2013 and 2014 and real estate acquired as part of the 2013 and 2014 Acquisitions.

Interest expense. Interest expense was $9.7 million for the three months ended June 30, 2014 compared to $9.4 million for the three months ended June 30, 2013. The increase in interest expense was primarily a result of the issuance of the 6.125% Senior Notes offset by a reduction related to the redemption of $52.5 million in principal amount of the 12.875% Senior Notes on March 12, 2013.

Gain on foreign currency derivatives. In connection with the acquisition of PiC, the Company entered into foreign currency forward contracts in June 2014 in order to fix the exchange rate applicable to the payment of the purchase price on July 1, 2014. Favorable exchange rate changes resulted in an increase in the fair value of the forward contracts and a gain on foreign currency derivatives of $13.7 million for the three months ended June 30, 2014.

Transaction-related expenses. Transaction-related expenses were $3.0 million for the three months ended June 30, 2014 compared to $1.4 million for the three months ended June 30, 2013. Transaction-related expenses represent costs incurred in the respective periods, primarily related to the 2013 and 2014 Acquisitions and the Company’s acquisition of PiC on July 1, 2014, as summarized below (in thousands):

	Three Months Ended June 30,
	2014		2013
Legal, accounting and other costs	$	3,016	$	798
Severance and contract termination costs		—		557
	$	3,016	$	1,355

Provision for income taxes. For the three months ended June 30, 2014, the provision for income taxes was $14.9 million, reflecting an effective tax rate of 39.9%, compared to $8.0 million, reflecting an effective tax rate of 39.5%, for 2013. The increase in the tax rate for the three months ended June 30, 2014 was primarily attributable to non-deductible transaction-related expenses associated with acquisition of PiC on July 1, 2014.

Six months ended June 30, 2014 compared to the six months ended June 30, 2013

Revenue before provision for doubtful accounts. Revenue before provision for doubtful accounts increased $78.1 million, or 22.4%, to $426.8 million for the six months ended June 30, 2014 from $348.7 million for the six months ended June 30, 2013. The increase related primarily to revenue generated during the six months ended June 30, 2014 from the facilities acquired in our 2013 and 2014 Acquisitions. Same-facility revenue before provision for doubtful accounts increased by $36.3 million, or 10.5%, for the six months ended June 30, 2014 compared to the six months ended June 30, 2013, resulting from same-facility growth in patient days of 9.1% and same-facility revenue per day of 1.5%. Consistent with the same-facility patient day growth in 2013, the growth in same-facility patient days for the six months ended June 30, 2014 compared to the six months ended June 30, 2013 resulted from the addition of beds to our existing facilities and ongoing demand for our services.

Provision for doubtful accounts. The provision for doubtful accounts was $11.6 million for the six months ended June 30, 2014, or 2.7% of revenue before provision for doubtful accounts, compared to $9.9 million for the six months ended June 30, 2013, or 2.9% of revenue before provision for doubtful accounts. The decrease as a percentage of revenue related primarily to improved collection experience due to enhancements in our business office operations. The same-facility provision for doubtful accounts was $10.2 million for the six months ended June 30, 2014, or 2.7% of revenue before provision for doubtful accounts, compared to $9.9 million for the six months ended June 30, 2013, or 2.9% of revenue before provision for doubtful accounts.

Salaries, wages and benefits. SWB expense was $240.0 million for the six months ended June 30, 2014 compared to $195.1 million for the six months ended June 30, 2013, an increase of $44.9 million. SWB expense included $4.2 million and $2.4 million of equity-based compensation expense for the six months ended June 30, 2014 and 2013, respectively. Excluding equity-based compensation expense, SWB expense was $235.8 million, or 56.8% of revenue, for the six months ended June 30, 2014, compared to $192.7 million, or 56.9% of revenue, for the six months ended June 30, 2013. The $43.1 million increase in SWB expense, excluding equity-based compensation expense, was primarily attributable to SWB expense incurred by the facilities acquired in our 2013 and 2014 Acquisitions. Same-facility SWB expense was $196.9 million for the six months ended June 30, 2014, or 52.7% of revenue, compared to $182.4 million for the six months ended June 30, 2013, or 54.1% of revenue.

Professional fees. Professional fees were $21.3 million for the six months ended June 30, 2014, or 5.1% of revenue, compared to $18.3 million for the six months ended June 30, 2013, or 5.4% of revenue. The $3.0 million increase was primarily attributable to professional fees incurred by the facilities acquired in our 2013 and 2014 Acquisitions. Same-facility professional fees were $15.5 million for the six months ended June 30, 2014, or 4.1% of revenue, compared to $15.2 million, for the six months ended June 30, 2013, or 4.5% of revenue.

Supplies. Supplies expense was $20.7 million for the six months ended June 30, 2014, or 5.0% of revenue, compared to $18.2 million for the six months ended June 30, 2013, or 5.4% of revenue. The $2.5 million increase was primarily attributable to supplies expense incurred by the facilities acquired in our 2013 and 2014 Acquisitions. Same-facility supplies expense was $18.0 million for the six months ended June 30, 2014, or 4.8% of revenue, compared to $18.1 million for the six months ended June 30, 2013, or 5.4% of revenue.

Rents and leases. Rents and leases were $5.7 million for the six months ended June 30, 2014, or 1.4% of revenue, compared to $4.7 million for the six months ended June 30, 2013, or 1.4% of revenue. The $1.0 million increase was primarily attributable to rents and leases incurred by the facilities acquired in our 2013 and 2014 Acquisitions. Same-facility rents and leases were $5.0 million for the six months ended June 30, 2014, or 1.3% of revenue, compared to $4.6 million for the six months ended June 30, 2013, or 1.4% of revenue.

Other operating expenses. Other operating expenses consisted primarily of purchased services, utilities, insurance, travel and repairs and maintenance expenses. Other operating expenses were $47.8 million for the six months ended June 30, 2014, or 11.5% of revenue, compared to $37.1 million for the six months ended June 30, 2013, or 10.9% of revenue. The increase in other operating expenses as a percentage of revenue was primarily attributable to higher other operating expenses incurred by the facilities acquired in our 2013 and 2014 Acquisitions, which had higher other operating expenses as a percentage of revenue than our facilities acquired prior to 2013. Same-facility other operating expenses were $40.3 million for the six months ended June 30, 2014, or 10.8% of revenue, compared to $36.2 million for the six months ended June 30, 2013, or 10.7% of revenue.

Depreciation and amortization. Depreciation and amortization expense was $11.4 million for the six months ended June 30, 2014, or 2.7% of revenue, compared to $7.8 million for the six months ended June 30, 2013, or 2.3% of revenue. The increase in depreciation and amortization was attributable to depreciation associated with capital expenditures during 2013 and 2014 and real estate acquired as part of the 2013 and 2014 Acquisitions.

Interest expense. Interest expense was $19.4 million for the six months ended June 30, 2014 compared to $18.2 million for the six months ended June 30, 2013. The increase in interest expense was primarily a result of the issuance of the 6.125% Senior Notes offset by a reduction related to the redemption of $52.5 million in principal amount of the 12.875% Senior Notes on March 12, 2013.

Gain on foreign currency derivatives. In connection with the acquisition of PiC, the Company entered into foreign currency forward contracts in June 2014 in order to fix the exchange rate applicable to the payment of the purchase price on July 1, 2014. Favorable exchange rate changes resulted in an increase in the fair value of the forward contracts and a gain on foreign currency derivatives of $13.7 million for the six months ended June 30, 2014.

Debt extinguishment costs. Debt extinguishment costs for the six months ended June 30, 2013 represent $6.8 million of cash charges and $2.6 million of noncash charges recorded in connection with the redemption of $52.5 million in principal amount of the 12.875% Senior Notes on March 12, 2013.

Transaction-related expenses. Transaction-related expenses were $4.6 million for the six months ended June 30, 2014 compared to $2.8 million for the six months ended June 30, 2013. Transaction-related expenses represent costs incurred in the respective periods, primarily related to the 2013 and 2014 Acquisitions and the Company’s acquisition of PiC on July 1, 2014, as summarized below (in thousands):

	Six Months Ended June 30,
	2014		2013
Legal, accounting and other costs	$	4,136	$	1,803
Severance and contract termination costs		459		1,026
	$	4,595	$	2,829

Provision for income taxes. For the six months ended June 30, 2014, the provision for income taxes was $22.7 million, reflecting an effective tax rate of 39.0%, compared to $10.7 million, reflecting an effective tax rate of 39.6%, for 2013. The decrease in the tax rate for the six months ended June 30, 2014 was primarily attributable to various state tax planning initiatives and restructurings partially offset by non-deductible transaction-related expenses associated with acquisition of PiC on July 1, 2014.

Liquidity and Capital Resources

Cash provided by continuing operating activities for the six months ended June 30, 2014 was $29.3 million compared to $29.6 million for the six months ended June 30, 2013. Days sales outstanding as of June 30, 2014 was 47 compared to 46 as of December 31, 2013. As of June 30, 2014 and December 31, 2013, we had working capital of $346.9 million and $30.4 million, respectively.

Cash used in investing activities for the six months ended June 30, 2014 was $72.1 million compared to $156.0 million for the six months ended June 30, 2013. Cash used in investing activities for the six months ended June 30, 2014 primarily consisted of $10.0 million of cash paid for acquisitions. Cash paid for capital expenditures for the six months ended June 30, 2014 was $43.3 million, consisting of $9.7 million of routine capital expenditures and $33.6 million of expansion capital expenditures. We define expansion capital expenditures as those that increase the capacity of our facilities or otherwise enhance revenue. Routine or maintenance capital expenditures were 2.3% of revenue for the six months ended June 30, 2014. Cash paid for real estate acquisitions was $18.3 million for the six months ended June 30, 2014. Cash used in investing activities for the six months ended June 30, 2013 consisted primarily of cash paid for acquisitions of $121.7 million, cash paid for capital expenditures of $29.7 million and cash paid for real estate acquisitions of $4.0 million.

Cash provided by financing activities for the six months ended June 30, 2014 was $316.0 million compared to $84.7 million for the six months ended June 30, 2013. Cash provided by financing activities for the six months ended June 30, 2014 primarily consisted of the $374.3 million of proceeds from our issuance of common stock, borrowings on revolving credit facility of $59.5 million, borrowings on long-term debt of $7.5 million and an excess tax benefit from equity awards of $3.5 million, partially offset by principal payments on our revolving credit facility of $113.0 million, payment of debt issuance costs of $5.8 million, principal payments on long-term debt of $3.8 million, cash paid as contingent consideration for an acquisition based upon earnings of Park Royal and common stock withheld for minimum statutory taxes of $3.0 million. Cash provided by financing activities for the six months ended June 30, 2013 primarily consisted of long-term debt borrowings of $150.0 million in connection with the issuance of the 6.125% Senior Notes, borrowings on revolving credit facility of $8.0 million and an excess tax benefit from equity awards of $1.2 million, partially offset by repayment of long-term debt of $52.5 million, principal payments on revolving credit facility of $8.0 million, payment of premium on note redemption of $6.8 million, payment of debt issuance costs of $4.3 million, principal payments on long-term debt of $1.9 million and common stock withheld for minimum statutory taxes of $1.1 million.

Amended and Restated Senior Credit Facility

We entered into the Senior Secured Credit Facility on April 1, 2011. On December 31, 2012, the Company entered into the Amended and Restated Credit Agreement which amended and restated the Senior Secured Credit Facility.

On February 13, 2014, we entered into the Fourth Amendment to the Amended and Restated Credit Agreement, to increase the size of the Amended and Restated Senior Credit Facility and extend the maturity date thereof, which resulted in the Company having a revolving line of credit of up to $300.0 million and term loans of $300.0 million. The Fourth Amendment also reduced the interest rates applicable to the Amended and Restated Senior Credit Facility and provided increased flexibility to the Company in terms of the financial and other restrictive covenants. The Fourth Amendment also provides for a $150.0 million incremental credit facility, with the potential for unlimited additional incremental amounts, provided the Company meets certain financial ratios, in each case subject to customary conditions precedent to borrowing.

On June 16, 2014, we entered into the Fifth Amendment to the Amended and Restated Senior Credit Facility. The Fifth Amendment specifically permitted the acquisition of PiC, gave us the ability to incur a tranche of term loan B debt in the future through its incremental credit facility, and modified certain of the restrictive covenants on miscellaneous investments and incurrence of miscellaneous liens. The restrictive covenants on investments in joint ventures and foreign subsidiaries were also amended such that we may now invest, in any given fiscal year, up to five percent (5%) of our total assets in both joint ventures and foreign subsidiaries, respectively; provided that the aggregate amount of investments in both joint ventures and foreign subsidiaries, respectively, may not exceed ten percent (10%) of its total assets over the life of the Amended and Restated Senior Credit Facility; provided further that the aggregate amount of investments made in both joint ventures and foreign subsidiaries collectively pursuant to the foregoing may not exceed fifteen percent (15%) of our total assets. Finally, the Fifth Amendment provided increased flexibility to the Company in terms of our financial covenants, as described in the charts below.

The Company had $299.6 million of availability under the revolving line of credit as of June 30, 2014, of which $125.0 million was borrowed on July 1, 2014 in connection with the PiC acquisition. Borrowings under the revolving line of credit are subject to customary conditions precedent to borrowing. The term loans require quarterly principal payments of $1.9 million for June 30, 2014 to December 31, 2014, $3.8 million for March 31, 2015 to December 31, 2015, $5.6 million for March 31, 2016 to December 31, 2016, $7.5 million for March 31, 2017 to December 31, 2017, and $9.4 million for March 31, 2018 to December 31, 2018, with the remaining principal balance due on the maturity date of February 13, 2019.

As amended by the Fifth Amendment, the Amended and Restated Credit Agreement requires the Company and its subsidiaries to comply with customary affirmative, negative and financial covenants. A breach of any of the restrictions or covenants in our debt agreements could cause a cross-default under other debt agreements. We may be required to pay all of our indebtedness immediately if we default on any of the numerous financial or other restrictive covenants contained in any of our material debt agreements. Set forth below is a brief description of such covenants, all of which are subject to customary exceptions, materiality thresholds and qualifications:

a) the affirmative covenants include the following: (i) delivery of financial statements and other customary financial information; (ii) notices of events of default and other material events; (iii) maintenance of existence, ability to conduct business, properties, insurance and books and records; (iv) payment of taxes; (v) lender inspection rights; (vi) compliance with laws; (vii) use of proceeds; (viii) further assurances; and (ix) additional collateral and guarantor requirements.

b) the negative covenants include limitations on the following: (i) liens; (ii) debt (including guaranties); (iii) investments; (iv) fundamental changes (including mergers, consolidations and liquidations); (v) dispositions; (vi) sale leasebacks; (vii) affiliate transactions; (viii) burdensome agreements; (ix) restricted payments; (x) use of proceeds; (xi) ownership of subsidiaries; (xii) changes to line of business; (xiii) changes to organizational documents, legal name, state of formation, form of entity and fiscal year; (xiv) prepayment or redemption of certain senior unsecured debt; and (xv) amendments to certain material agreements. The Company is generally not permitted to issue dividends or distributions other than with respect to the following: (w) certain tax distributions; (x) the repurchase of equity held by employees, officers or directors upon the occurrence of death, disability or termination subject to cap of $500,000 in any fiscal year and compliance with certain other conditions; (y) in the form of capital stock; and (z) scheduled payments of deferred purchase price, working capital adjustments and similar payments pursuant to the merger agreement or any permitted acquisition.

c) The financial covenants include maintenance of the following:

• the fixed charge coverage ratio may not be less than 1.25:1.00 as of the end of any fiscal quarter;

• the consolidated leverage ratio may not be greater than (i) if the Bridge Senior Unsecured Indebtedness (as defined in the Amended and Restated Senior Credit Facility) is not incurred, the ratio set forth in Column A and (ii) if the Bridge Senior Unsecured Indebtedness is incurred, the ratio set forth in Column B::

Fiscal Quarter Ending	Maximum Consolidated Leverage Ratio (1)
	Column A		Column B
June 30, 2014		5.75:1.0		7.25:1.0
September 30, 2014		5.75:1.0		7.25:1.0
December 31, 2014		5.50:1.0		6.50:1.0
March 31, 2015		5.50:1.0		6.50:1.0
June 30, 2015		5.50:1.0		6.50:1.0
September 30, 2015		5.50:1.0		6.50:1.0
December 31, 2015		5.25:1.0		5.75:1.0
March 31, 2016		5.25:1.0		5.75:1.0
June 30, 2016		5.25:1.0		5.75:1.0
September 30, 2016		5.25:1.0		5.75:1.0
December 31, 2016		5.00:1.0		5.00:1.0
March 31, 2017		5.00:1.0		5.00:1.0
June 30, 2017		5.00:1.0		5.00:1.0
September 30, 2017		5.00:1.0		5.00:1.0
December 31, 2017 and each fiscal quarter ending thereafter		4.50:1.0		4.50:1.0

(1) The Company did not incur any Bridge Senior Unsecured Indebtedness.

• The consolidated senior secured leverage ratio may not be greater than the amount set forth below as of the date opposite such ratio:

Fiscal Quarter Ending	Maximum Consolidated Senior Secured Leverage Ratio
June 30, 2014		3.75:1.0
September 30, 2014		3.75:1.0
December 31, 2014		3.75:1.0
March 31, 2015 and each fiscal quarter ending thereafter		3.50:1.0

As of June 30, 2014, the Company was in compliance with all of the above covenants.

The interest rates and the unused line fee on unused commitments related to the Amended and Restated Senior Credit Facility are based upon the following pricing tiers:

Pricing Tier	Consolidated Leverage Ratio	LIBOR Rate Loans			Base Rate Loans			Unused Line Fee
1	<3.5:1.0		2.25	%		1.25	%		0.30	%
2	³3.5:1.0 but <4.0:1.0		2.50	%		1.50	%		0.35	%
3	³4.0:1.0 but <4.5:1.0		2.75	%		1.75	%		0.40	%
4	³4.50:1.0 but <5.25:1.0		3.00	%		2.00	%		0.45	%
5	³5.25:1.0		3.25	%		2.25	%		0.50	%

Borrowings under the Amended and Restated Senior Credit Facility are guaranteed by each of the Company’s wholly-owned domestic subsidiaries (other than Park Royal and certain other excluded subsidiaries) and are secured by a lien on substantially all of the assets of the Company and such subsidiaries. Borrowings under the Amended and Restated Senior Credit Facility bear interest at a rate tied to Acadia’s Consolidated Leverage Ratio (defined as consolidated funded debt net of up to $20,000,000 of unrestricted and unencumbered cash to consolidated EBITDA, in each case as defined in the Amended and Restated Credit Agreement). The Applicable Rate (as defined in the Amended and Restated Credit Agreement) for borrowings under the Amended and Restated Senior Credit Facility was 2.75% for Eurodollar Rate Loans (as defined in the Amended and Restated Credit Agreement) and 1.75% for Base Rate Loans (as defined in the Amended and Restated Credit Agreement) at June 30, 2014. Eurodollar Rate Loans bear interest at the Applicable Rate plus the Eurodollar Rate (as defined in the Amended and Restated Credit Agreement) (based upon the LIBOR Rate (as defined in the Amended and Restated Credit Agreement) prior to commencement of the interest rate period). Base Rate Loans bear interest at the Applicable Rate plus the highest of (i) the federal funds rate plus 0.50%, (ii) the prime rate and (iii) the Eurodollar Rate plus 1.0%. As of June 30, 2014, borrowings under the Senior Secured Credit Facility bore interest at a rate of LIBOR plus 2.75%. In addition, we are required to pay a commitment fee on undrawn amounts under the revolving line of credit. We paid a commitment fee of 0.50% for undrawn amounts for the period from January 1, 2013 through February 12, 2014 and 0.40% for undrawn amounts for the period from February 13, 2014 through June 30, 2014. The Amended and Restated Senior Credit Facility matures on February 13, 2019.

12.875% Senior Notes due 2018

On November 1, 2011, we issued $150.0 million of 12.875% Senior Notes due 2018 at 98.323% of the aggregate principal amount of $150.0 million, a discount of $2.5 million. The notes bear interest at a rate of 12.875% per annum. We pay interest on the notes semi-annually, in arrears, on November 1 and May 1 of each year.

The indenture governing the 12.875% Senior Notes contains covenants that, among other things, limit our ability and the ability of our restricted subsidiaries to: (i) pay dividends, redeem stock or make other distributions or investments; (ii) incur additional debt or issue certain preferred stock; (iii) transfer or sell assets; (iv) engage in certain transactions with affiliates; (v) create restrictions on dividends or other payments by the restricted subsidiaries; (vi) merge, consolidate or sell substantially all of the Company’s assets; and (vii) create liens on assets.

The 12.875% Senior Notes issued by the Company are guaranteed by each of the Company’s subsidiaries that guarantee the Company’s obligations under the Amended and Restated Senior Credit Facility. The guarantees are full and unconditional and joint and several.

On March 12, 2013, we redeemed $52.5 million in principal amount of the 12.875% Senior Notes using a portion of the net proceeds of our December 2012 equity offering pursuant to the provision in the indenture permitting an optional redemption with equity proceeds of up to 35% of the principal amount of 12.875% Senior Notes. The 12.875% Senior Notes were redeemed at a redemption price of 112.875% of the principal amount thereof plus accrued and unpaid interest to, but not including, the redemption date in accordance with the provisions of the indenture governing the 12.875% Senior Notes. As part of the redemption of 35% of the 12.875% Senior Notes, the Company recorded a debt extinguishment charge of $9.4 million, including the premium and write-off of deferred financing costs, which was recorded in debt extinguishment costs in the consolidated statements of operations.

6.125% Senior Notes Due 2021

On March 12, 2013, we issued $150.0 million of 6.125% Senior Notes due 2021. The 6.125% Senior Notes mature on March 15, 2021 and bear interest at a rate of 6.125% per annum, payable semi-annually in arrears on March 15 and September 15 of each year.

The indenture governing the 6.125% Senior Notes contains covenants that, among other things, limit the Company’s ability and the ability of its restricted subsidiaries to: (i) pay dividends, redeem stock or make other distributions or investments; (ii) incur additional debt or issue certain preferred stock; (iii) transfer or sell assets; (iv) engage in certain transactions with affiliates; (v) create restrictions on dividends or other payments by the restricted subsidiaries; (vi) merge, consolidate or sell substantially all of the Company’s assets; and (vii) create liens on assets.

The 6.125% Senior Notes issued by the Company are guaranteed by each of the Company’s subsidiaries that guarantee the Company’s obligations under the Amended and Restated Credit Facility. The guarantees are full and unconditional and joint and several.

We may redeem the 6.125% Senior Notes at our option, in whole or part, at any time prior to March 15, 2016, at a price equal to 100% of the principal amount of the 6.125% Senior Notes redeemed, plus accrued and unpaid interest to the redemption date and plus an applicable premium. We may redeem the 6.125% Senior Notes, in whole or in part, on or after March 15, 2016, at the redemption prices set forth in the indenture governing the 6.125% Senior Notes plus accrued and unpaid interest to the redemption date. At any time on or before March 15, 2016, we may elect to redeem up to 35% of the aggregate principal amount of the 6.125% Senior Notes at a redemption price equal to 106.125% of the principal amount thereof, plus accrued and unpaid interest to the redemption date, with the net proceeds of one or more equity offerings.

5.125% Senior Notes due 2022

On July 1, 2014, the Company issued $300.0 million of 5.125% Senior Notes due 2022. The 5.125% Senior Notes mature on July 1, 2022 and bear interest at a rate of 5.125% per annum, payable semi-annually in arrears on January 1 and July 1 of each year, beginning on January 1, 2015.

The indenture governing the 5.125% Senior Notes contains covenants that, among other things, limit the Company’s ability and the ability of its restricted subsidiaries to: (i) pay dividends, redeem stock or make other distributions or investments; (ii) incur additional debt or issue certain preferred stock; (iii) transfer or sell assets; (iv) engage in certain transactions with affiliates; (v) create restrictions on dividends or other payments by the restricted subsidiaries; (vi) merge, consolidate or sell substantially all of the Company’s assets and (vii) create liens on assets.

The 5.125% Senior Notes issued by the Company are guaranteed by each of the Company’s subsidiaries that guarantee the Company’s obligations under the Amended and Restated Credit Facility. The guarantees are full and unconditional and joint and several.

We may redeem the 5.125% Senior Notes at its option, in whole or part, at any time prior to July 1, 2017, at a price equal to 100% of the principal amount of the 5.125% Senior Notes redeemed, plus accrued and unpaid interest to the redemption date and plus an applicable premium. We may redeem the 5.125% Senior Notes, in whole or in part, on or after July 1, 2017, at the redemption prices set forth in the indenture governing the 5.125% Senior Notes plus accrued and unpaid interest to the redemption date. At any time on or before July 1, 2017, the Company may elect to redeem up to 35% of the aggregate principal amount of the 5.125% Senior Notes at a redemption price equal to 105.125% of the principal amount thereof, plus accrued and unpaid interest to the redemption date, with the net proceeds of one or more equity offerings.

9.0% and 9.5% Revenue Bonds

On November 11, 2012, in connection with the acquisition of Park Royal, we assumed debt of $23.0 million. The fair market value of the debt assumed was $25.6 million and resulted in a debt premium balance being recorded as of the acquisition date. The debt consisted of $7.5 million and $15.5 million of Lee County (Florida) Industrial Development Authority Healthcare Facilities Revenue Bonds, Series 2010 with stated interest rates of 9.0% and 9.5%, respectively. The 9.0% bonds in the amount of $7.5 million have a maturity date of December 1, 2030 and require yearly principal payments beginning in 2013. The 9.5% bonds in the amount of $15.5 million have a maturity date of December 1, 2040 and require yearly principal payments beginning in 2031. The principal payments establish a bond-sinking fund to be held with the trustee and shall be sufficient to redeem the principal amounts of the 9.0% and 9.5% Revenue Bonds on their respective maturity dates. As of June 30, 2014 and December 31, 2013, $2.3 million was recorded within other assets on the balance sheet related to the debt service reserve fund requirements. The yearly principal payments, which establish a bond sinking fund, will increase the debt service reserve fund requirements. The bond premium amount of $2.6 million is amortized as a reduction of interest expense over the life of the 9.0% and 9.5% Revenue Bonds using the effective interest method.

Contractual Obligations

The following table presents a summary of contractual obligations as of June 30, 2014 (dollars in thousands):

	Payments Due by Period
	Less Than 1 Year		1-3 Years		3-5 Years		More Than 5 Years		Total
Long-term debt (a)	$	44,853	$	107,247	$	305,490	$	316,497	$	774,087
Operating leases		9,867		12,717		7,095		19,224		48,903
Purchase and other obligations (b)		4,030		562		870		—		5,462
Total obligations and commitments	$	58,750	$	120,526	$	313,455	$	335,721	$	828,452

(a) Amounts include required principal and interest payments. The projected interest payments reflect an interest rate of 2.75% per annum for our variable-rate debt based on the rate in place as of June 30, 2014.

(b) Amounts relate to purchase obligations, including capital lease payments and contingent payments of up to $3.8 million related to the acquisition of Park Royal in November 2012 that we may make depending upon achievements of certain financial targets over the four-year period ending December 31, 2016.

Off-Balance Sheet Arrangements

As of June 30, 2014, we had standby letters of credit outstanding of $0.4 million related to security for the payment of claims as required by our workers’ compensation insurance program.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Our interest expense is sensitive to changes in market interest rates. With respect to our interest-bearing liabilities, our long-term debt outstanding at June 30, 2014 was composed of $271.0 million of fixed-rate debt and $296.3 million of variable-rate debt with interest based on LIBOR plus an applicable margin. A hypothetical 10% increase in interest rates would decrease our net income and cash flows by $0.5 million on an annual basis based upon our borrowing level at June  30, 2014.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this report, our management conducted an evaluation, with the participation of our chief executive officer and chief financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)). Based on this evaluation, our chief executive officer and chief financial officer have concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting during the three months ended June 30, 2014 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

We are, from time to time, subject to various claims and legal actions that arise in the ordinary course of our business, including claims for damages for personal injuries, medical malpractice, breach of contract, tort and employment related claims. In these actions, plaintiffs request a variety of damages, including, in some instances, punitive and other types of damages that may not be covered by insurance. In the opinion of management, we are not currently a party to any proceeding that would have a material adverse effect on our business, financial condition or results of operations.

Item 1A. Risk Factors

Acadia has updated and revised the risk factors previously disclosed in its periodic reports filed with the Securities and Exchange Commission from time to time. In addition to the other information set forth in this report, an investor should carefully consider the factors discussed below. Any of the following risks could materially and adversely affect our business, financial condition or results of operations. These risks should be carefully considered before making an investment decision regarding us. The risks and uncertainties described below are not the only ones we face and there may be additional risks that we are not presently aware of or that we currently consider not likely to have a significant impact. If any of the following risks actually occurred, our business, financial condition and operating results could suffer, and the trading price of our common stock could decline.

Fluctuations in our operating results, quarter to quarter earnings and other factors, including incidents involving our patients and negative media coverage, may result in significant decreases in the price of our securities.

The capital markets experience volatility that is often unrelated to operating performance. These broad market fluctuations may adversely affect the trading price of our securities and, as a result, there may be significant volatility in the market price of our securities. If we are unable to operate our facilities as profitably as we have in the past or as our investors expect us to in the future, the market price of our securities will likely decline when it becomes apparent that the market expectations may not be realized. In addition to our operating results, many economic and seasonal factors outside of our control could have an adverse effect on the price of our securities and increase fluctuations in our quarterly earnings. These factors include certain of the risks discussed herein, demographic changes, operating results of other healthcare companies, changes in our financial estimates or recommendations of securities analysts, speculation in the press or investment community, the possible effects of war, terrorist and other hostilities, adverse weather conditions, the level of seasonal illnesses, managed care contract negotiations and terminations, changes in general conditions in the economy or the financial markets or other developments affecting the healthcare industry.

An incident involving one or more of our patients or the failure by one or more of our facilities to provide high quality care could result in increased regulatory burdens, governmental investigations, negative publicity and adversely affect the trading price of our securities.

If one or more of our facilities experiences an adverse patient incident or is found to have failed to provide appropriate patient care, an admissions hold or other adverse regulatory action could be taken against us. Any such patient incident or adverse regulatory action could result in governmental investigations, judgments or fines and have a material adverse effect on our business, financial condition and results of operations. In addition, we could receive negative publicity or unfavorable media attention, whether warranted or unwarranted, that could have a significant, adverse effect on the trading price of our securities.

Our revenues and results of operations are significantly affected by payments received from the government and third-party payors.

A significant portion of our revenues are from government healthcare programs, principally Medicare, Medicaid and the National Health Service (“NHS”). For the six months ended June 30, 2014, Acadia derived approximately 67% of its revenues from the Medicare and Medicaid programs, and Partnerships in Care derived approximately 97% of its revenue from NHS.

Changes in these government programs in recent years have resulted in limitations on reimbursement and, in some cases, reduced levels of reimbursement for healthcare services. Payments from federal, state and United Kingdom government healthcare programs are subject to statutory and regulatory changes, administrative rulings, interpretations and determinations, requirements for utilization review, and governmental funding restrictions, all of which could materially increase or decrease program payments, as well as affect the cost of providing service to patients and the timing of payments to facilities. We are unable to predict the effect of recent and future policy changes on our operations. In addition, since most states operate with balanced budgets, and since the Medicaid program is often a state’s largest program, some states can be expected to enact or consider enacting legislation formulated to reduce their Medicaid expenditures. Furthermore, the recent economic downturn has increased the budgetary pressures on the federal government and many state governments, which may negatively affect the availability of taxpayer funds for Medicare and Medicaid programs.

If the rates paid or the scope of services covered by government payors are reduced, there could be a material adverse effect on our business, financial condition and results of operations.

In addition to changes in government reimbursement programs, our ability to negotiate favorable contracts with private payors, including managed care providers, significantly affects the financial condition and operating results of our facilities in the United States. Management expects third-party payors to aggressively manage reimbursement levels and cost controls. Reductions in reimbursement amounts received from third-party payors could have a material adverse effect on our business, financial condition and results of operations.

Our facilities acquired from Partnerships in Care rely on publicly funded entities in the United Kingdom for approximately 97% of their revenue, and the loss or reduction of such funding or changes to procurement methods could negatively impact occupancy rates which could have a corresponding material adverse effect on our business, results of operations, financial condition or prospects.

Referrals to Partnerships in Care’s services by NHS accounted for approximately 97% of its revenue for the year ended December 31, 2013. There is a risk that budget constraints, public spending cuts (such as the cuts announced by the United Kingdom government in the 2010 Comprehensive Spending Review and implemented in the 2011 and 2012 government budgets) or other financial pressures could cause NHS to reduce funding for the types of services that Partnerships in Care provides. For example, in 2010, NHS announced a period of austerity and reduced spending and outsourcing of medical health treatment, which adversely affected our results from 2010 to 2012 until such austerity was relaxed. In addition, policy changes in the United Kingdom could lead to fewer of such services being purchased by publicly funded entities or material changes being made to their procurement practices, or the in-sourcing of mental health services, any of which could materially reduce the revenue of the Partnerships in Care facilities.

The Partnerships in Care facilities may not achieve fee rate increases or may suffer fee rate decreases, which could have an adverse impact on our business, results of operations, financial condition or prospects.

The majority of fee rates that the facilities acquired from Partnerships in Care decide to set for their services are subject to annual adjustments. NHS has been under budgetary pressure since the announcement by the United Kingdom Government of the Comprehensive Spending Review in 2010 imposing cuts on government spending and have, as such, reduced its spending. This resulted in Partnerships in Care being unable to implement material price increases during the last several years (which has adversely affected its results), and there can be no assurance that we will be able to implement price increases in the future. Furthermore, should the effect of any increase in the annual wages or other operating costs of the Partnerships in Care business exceed the effect of any increase in such facilities’ weekly fee rates (which are the basis of the Partnerships in Care facilities’ revenue), we would have to absorb such costs and this could have a material adverse effect on our business, results of operations, financial condition or prospects.

Our substantial debt could adversely affect our financial health and prevent us from fulfilling our obligations under our financing arrangements.

As of June 30, 2014, we had $567.3 million of total debt, which included $296.3 million of debt under our Amended and Restated Senior Credit Facility, $97.5 million (before a discount of $1.2 million) of debt under our 12.875% Senior Notes, $150.0 million of debt under our 6.125% Senior Notes and $24.7 million (including a premium of $2.0 million) of debt under our 9.0% and 9.5% Revenue Bonds.

Our substantial debt could have important consequences to our business. For example, it could:

• increase our vulnerability to general adverse economic and industry conditions;

• make it more difficult for us to satisfy our other financial obligations;

• restrict us from making strategic acquisitions or cause us to make non-strategic divestitures;

• require us to dedicate a substantial portion of our cash flow from operations to payments on our debt (including scheduled repayments on our outstanding term loan borrowings under the Amended and Restated Senior Credit Facility), thereby reducing the availability of our cash flow to fund working capital, capital expenditures and other general corporate purposes;

• expose us to interest rate fluctuations because the interest on the Amended and Restated Senior Credit Facility is imposed at variable rates;

• make it more difficult for us to satisfy our obligations to our lenders, resulting in possible defaults on and acceleration of such debt;

• limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;

• place us at a competitive disadvantage compared to our competitors that have less debt;

• limit our ability to borrow additional funds; and

• limit our ability to pay dividends, redeem stock or make other distributions.

In addition, the terms of our financing arrangements contain restrictive covenants that limit our ability to engage in activities that may be in our long-term best interests. Our failure to comply with those covenants could result in an event of default which, if not cured or waived, could result in the acceleration of all of our debts, including the Amended and Restated Senior Credit Facility and the Senior Notes.

Servicing our debt will require a significant amount of cash. Our ability to generate sufficient cash to service our debt depends on many factors beyond our control.

Our ability to make payments on and to refinance our debt, to fund planned capital expenditures and to maintain sufficient working capital will depend on our ability to generate cash in the future. This, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control.

We cannot assure you that our business will generate sufficient cash flow from operations or that future borrowings will be available to us under the Amended and Restated Senior Credit Facility or from other sources in an amount sufficient to enable us to service our debt or to fund our other liquidity needs. If our cash flow and capital resources are insufficient to allow us to make scheduled payments on our debt, we may need to reduce or delay capital expenditures, sell assets, seek additional capital or restructure or refinance all or a portion of our debt on or before the maturity thereof, any of which could have a material adverse effect on our business, financial conditions or results of operations. We cannot assure you that we will be able to refinance any of our debt on commercially reasonable terms or at all, or that the terms of that debt will allow any of the above alternative measures or that these measures would satisfy our scheduled debt service obligations. If we are unable to generate sufficient cash flow to repay or refinance our debt on favorable terms, it could significantly adversely affect our financial condition and the value of our outstanding debt. Our ability to restructure or refinance our debt will depend on the condition of the capital markets and our financial condition. Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations.

We are subject to a number of restrictive covenants, which may restrict our business and financing activities.

Our financing arrangements impose, and the terms of any future debt may impose, operating and other restrictions on us. Such restrictions affect, and in many respects limit or prohibit, among other things, our and our subsidiaries’ ability to:

• incur or guarantee additional debt and issue certain preferred stock;

• pay dividends on our common stock or redeem, repurchase or retire our common stock or subordinated debt;

• transfer or sell our assets:

• make certain payments or investments;

• make capital expenditures;

• create certain liens on assets;

• create restrictions on the ability of our subsidiaries to pay dividends or make other payments to us;

• engage in certain transactions with our affiliates; and

• merge or consolidate with other companies.

The Amended and Restated Senior Credit Facility also requires us to meet certain financial ratios, including a fixed charge coverage ratio and a consolidated leverage ratio.

These restrictions may prevent us from taking actions that management believes would be in the best interests of our business, and may make it difficult for us to successfully execute our business strategy or effectively compete with companies that are not similarly restricted. We also may incur future debt obligations that might subject us to additional restrictive covenants that could affect our financial and operational flexibility. Our ability to comply with these covenants in future periods will largely depend on the pricing of our products and services, our success at implementing cost reduction initiatives and our ability to successfully implement our overall business strategy. We cannot assure you that we will be granted waivers or amendments to our financing arrangements if for any reason we are unable to comply with our financial covenants. The breach of any of these covenants and restrictions could result in a default under the indentures governing our outstanding Senior Notes or under the Amended and Restated Senior Credit Facility, which could result in an acceleration of our debt.

Despite our current debt level, we may incur significant additional amounts of debt, which could further exacerbate the risks associated with our substantial debt.

We may incur substantial additional debt, including the issuance of additional notes and other secured debt, in the future. Although the indentures governing our outstanding Senior Notes and our Amended and Restated Senior Credit Facility contain restrictions on the incurrence of additional debt, these restrictions are subject to a number of significant qualifications and exceptions, and under certain circumstances, the amount of debt that could be incurred in compliance with these restrictions could be substantial. If new debt is added to our existing debt levels, the related risks that we now face would intensify and we may not be able to meet all our debt obligations.

If we default on our obligations to pay our indebtedness, we may not be able to make payments on our financing arrangements.

Any default under the agreements governing our indebtedness, including a default under our Amended and Restated Senior Credit Facility and the indentures governing our Senior Notes, and the remedies sought by the holders of such indebtedness, could adversely affect our ability to pay the principal, premium, if any, and interest on the notes and substantially decrease the market value of the notes. If we are unable to generate sufficient cash flows and are otherwise unable to obtain funds necessary to meet required payments of principal, premium, if any, and interest on our indebtedness, or if we otherwise fail to comply with the various covenants, including financial and operating covenants, in the instruments governing our indebtedness (including our Amended and Restated Senior Credit Facility and the indentures governing our Senior Notes), we would be in default under the terms of the agreements governing such indebtedness. In the event of such default, the holders of such indebtedness could elect to declare all the funds borrowed thereunder to be due and payable, the lenders under our Amended and Restated Senior Credit Facility could elect to terminate their commitments or cease making further loans and institute foreclosure proceedings against our assets, or we could be forced to apply all available cash flows to repay such indebtedness, and, in any such case, we could ultimately be forced into bankruptcy or liquidation. Because the Amended and Restated Senior Credit Facility and the indentures governing our Senior Notes have customary cross-default provisions, if any of the indebtedness under our Amended and Restated Senior Credit Facility or our Senior Notes is accelerated, our other indebtedness will be accelerated, making it even more difficult for us to repay or refinance the amounts due.

Expanding our operations internationally poses additional risks to our business.

Prior to the acquisition of Partnerships in Care, we were engaged in business activities in the United States and Puerto Rico. The acquisition of Partnerships in Care marks our first entry into a foreign market. Our business or financial performance may be adversely affected due to the risks of operating internationally, including but not limited to the following: economic and political instability, failure to comply with foreign laws and regulations and adverse changes in the health care policy of the United Kingdom (including decreases in funding for the services provided by Partnerships in Care), adverse changes in law and regulations affecting the operations of Partnerships in Care, difficulties and costs of staffing and managing our new operations in the United Kingdom. If any of these events were to materialize, they could lead to disruption of our business, significant expenditures and/or damages to our reputation, which could have a material adverse effect on our results of operations, financial condition or prospects.

As a company based outside of the United Kingdom, we will need to take certain actions to be more easily accepted in the United Kingdom. For example, we may need to engage in a public relations campaign to emphasize service quality and company philosophy, preserve local management continuity and business practices and be transparent in our dealings with local governments and taxing authorities. Such efforts will require significant time and effort on the part of our management team. Our results of operation could suffer if these efforts are not successful.

Our acquisition strategy exposes us to a variety of operational and financial risks.

A principal element of our business strategy is to grow by acquiring other companies and assets in the behavioral healthcare industry. Growth, especially rapid growth, through acquisitions exposes us to a variety of operational and financial risks. We summarize the most significant of these risks below.

Integration risks

We must integrate our acquisitions with our existing operations. This process includes the integration of the various components of our business and of the businesses we have acquired or may do so in the future, including the following:

• additional psychiatrists, other physicians and employees who are not familiar with our operations;

• patients who may elect to switch to another behavioral healthcare provider;

• regulatory compliance programs; and

• disparate operating, information and record keeping systems and technology platforms.

Integrating a new facility could be expensive and time consuming and could disrupt our ongoing business, negatively affect cash flow and distract management and other key personnel from day-to-day operations.

We may not be able to combine successfully the operations of recently acquired facilities with our operations, and even if such integration is accomplished, we may never realize the potential benefits of the acquisition. The integration of acquisitions with our operations requires significant attention from management, may impose substantial demands on our operations or other projects and may impose challenges on the combined business including, but not limited to, consistencies in business standards, procedures, policies, business cultures and internal controls and compliance. Certain acquisitions involve a capital outlay, and the return that we achieved on any capital invested may be less than the return that we would achieve on our other projects or investments. If we fail to complete the integration of recently acquired facilities, we may never fully realize the potential benefits of the related acquisitions.

We are integrating Partnerships in Care’s business into our current business. Successful integration depends on the ability to effect any required changes in operations or personnel which may entail unforeseen liabilities. The integration of Partnerships in Care may expose us to certain risks, including the following: difficulty in integrating Partnerships in Care in a cost-effective manner, including the establishment of effective management information and financial control systems; unforeseen legal, regulatory, contractual, employment or other issues arising out of the combination; combining corporate cultures; maintaining employee morale and retaining key employees; potential disruptions to our on-going business caused by its senior management’s focus on integrating Partnerships in Care; and performance of the combined assets not meeting our expectations or plans. A failure to properly integrate Partnerships in Care could have a corresponding material adverse effect on our business, results of operations, financial condition or prospects.

Benefits may not materialize

When evaluating potential acquisition targets, we identify potential synergies and cost savings that we expect to realize upon the successful completion of the acquisition and the integration of the related operations. We may, however, be unable to achieve or may otherwise never realize the expected benefits. Our ability to realize the expected benefits from potential cost savings and revenue improvement opportunities is subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control, such as changes to government regulation governing or otherwise impacting the behavioral healthcare industry, reductions in reimbursement rates from third-party payors, reductions in service levels under our contracts, operating difficulties, client preferences, changes in competition and general economic or industry conditions. If we are unsuccessful in implementing these improvements or if we do not achieve our expected results, it may adversely impact our business, financial condition or results of operations.

Assumptions of unknown liabilities

Facilities that we acquire, including the facilities acquired from Partnerships in Care, may have unknown or contingent liabilities, including, but not limited to, liabilities for uncertain tax positions, liabilities for failure to comply with healthcare laws and regulations and liabilities for unresolved litigation or regulatory reviews. Although we typically attempt to exclude significant liabilities from our acquisition transactions and seek indemnification from the sellers of such facilities, the purchase agreement with Partnerships in Care contained minimal representations and warranties about the entities and business that we acquired. In addition, we have no indemnification rights against the sellers under the purchase agreement and all of the purchase price consideration was paid at closing of the acquisition of Partnerships in Care. Therefore, we may incur material liabilities for the past activities of acquired entities and facilities. Even in those acquisitions in which we have such rights, we may experience difficulty enforcing the sellers’ obligations, or we may incur material liabilities for the past activities of acquired facilities. Such liabilities and related legal or other costs and/or resulting damage to a facility’s reputation could negatively impact our business, financial condition or results of operations.

Competing for acquisitions

We face competition for acquisition candidates primarily from other for-profit healthcare companies, as well as from not-for-profit entities. Some of our competitors may have greater resources than we do. As a result, we may pay more to acquire a target business or may agree to less favorable deal terms than we would have otherwise. Our principal competitors for acquisitions have included Universal Health Services, Aurora Behavioral Health Care and private equity firms. Also, suitable acquisitions may not be accomplished due to unfavorable terms. Further, the cost of an acquisition could result in a dilutive effect on our results of operations, depending on various factors, including the amount paid for an acquired facility, the acquired facility’s results of operations, the fair value of assets acquired and liabilities assumed, effects of subsequent legislation and limits on rate increases. In addition, we may have to pay cash, incur debt, or issue equity securities to pay for any such acquisition, which could adversely affect our financial results, result in dilution to our stockholders, result in increased fixed obligations or impede our ability to manage our operations.

Managing growth

Some of the facilities we have acquired or may acquire in the future may have had significantly lower operating margins prior to the time of our acquisition or may have had operating losses prior to such acquisition. If we fail to improve the operating margins of the facilities we acquire, operate such facilities profitably or effectively integrate the operations of the acquired facilities, our results of operations could be negatively impacted.

Failure to comply with the international and U.S. laws and regulations applicable to our international operations could subject us to penalties and other adverse consequences.

We face several risks inherent in conducting business internationally, including compliance with international and U.S. laws and regulations that apply to our international operations. These laws and regulations include U.S. laws such as the Foreign Corrupt Practices Act and other U.S. federal laws and regulations established by the Office of Foreign Asset Control, local laws such as the United Kingdom Bribery Act 2010 or other local laws which prohibit corrupt payments to governmental officials or certain payments or remunerations to customers. Given the high level of complexity of these laws, however, there is a risk that some provisions may be inadvertently breached by us, for example through fraudulent or negligent behavior of individual employees, our failure to comply with certain formal documentation requirements, or otherwise. Violations of these laws and regulations could result in fines, criminal sanctions against us, our officers or our employees, implementation of compliance programs, and prohibitions on the conduct of our business. Any such violations could include prohibitions on our ability to conduct business in the United Kingdom and could materially damage our reputation, our brand, our international expansion efforts, our ability to attract and retain employees, our business and our operating results. Our success depends, in part, on our ability to anticipate these risks and manage these challenges.

Foreign currency exchange rate fluctuations could materially impact our consolidated financial position and results of operations.

The acquisition of Partnerships in Care expanded our operations to the United Kingdom. Accordingly, a portion of our net revenues will be derived from operations in the United Kingdom, and we intend to translate sales and other results denominated in foreign currency into U.S. dollars for our consolidated financial statements. During periods of a strengthening U.S. dollar, our reported international sales and net earnings could be reduced because foreign currencies may translate into fewer U.S. dollars.

In all jurisdictions in which we operate, we are also subject to laws and regulations that govern foreign investment, foreign trade and currency exchange transactions. These laws and regulations may limit our ability to repatriate cash as dividends or otherwise to the United States and may limit our ability to convert foreign currency cash flows into U.S. dollars.

We incurred significant transaction and acquisition-related costs in connection with the acquisition of Partnerships in Care.

We incurred substantial costs in connection with the acquisition of Partnerships in Care, including approximately $16.0 million in transaction-related expenses. In addition, we may incur additional costs to maintain employee morale and to retain key employees, and we will incur substantial fees and costs related to formulating and executing integration plans. Although we expect that the elimination of duplicative costs, as well as the realization of other efficiencies related to the integration of the businesses, should allow us to more than offset incremental transaction and acquisition-related costs over time, this net benefit may not be achieved in the near term, or at all.

We made certain assumptions relating to the acquisition of Partnerships in Care in our forecasts that may prove to be materially inaccurate.

We made certain assumptions relating to the forecast level of cost savings, synergies and associated costs of the acquisition of Partnerships in Care. Our assumptions relating to the forecast level of cost savings, synergies and associated costs of the acquisition of Partnerships in Care may be inaccurate based on the information available to us, including as the result of the failure to realize the expected benefits of the acquisition of Partnerships in Care, higher than expected transaction and integration costs and unknown liabilities as well as general economic and business conditions that may adversely affect the combined company following the acquisition of Partnerships in Care. In addition, Partnerships in Care was operating at a net loss for the year ended December 31, 2013 and for the six months ended June 30, 2014, which may impact our ability to achieve synergies and profitability from the acquisition of Partnerships in Care in the near term.

We are subject to taxation in certain foreign jurisdictions following the acquisition of Partnerships in Care. Any adverse development in the tax laws of such jurisdictions or any disagreement with our tax positions could have a material adverse effect on our business, financial condition or results of operations. In addition, our effective tax rate could change materially as a result of certain changes in our mix of United States and foreign earnings and other factors, including changes in tax laws.

We are subject to taxation in, and to the tax laws and regulations of, certain foreign jurisdictions as a result of our operations and our corporate and financing structure after the acquisition of Partnerships in Care. Adverse developments in these tax laws or regulations, or any change in position regarding the application, administration or interpretation thereof, in any applicable jurisdiction, could have a material adverse effect on our business, financial condition or results of operations. In addition, the tax authorities in any applicable jurisdiction may disagree with the tax treatment or characterization of any of our transactions, which, if successfully challenged by such tax authorities, could have a material adverse effect on our business, financial condition or results of operations. Certain changes in the mix of our earnings between jurisdictions and assumptions used in the calculation of income taxes, among other factors, could have a material adverse effect on our overall effective tax rate. In addition, legislative proposals to change the United States taxation of foreign earnings could also increase our effective tax rate.

A worsening of the economic and employment conditions in the geographies in which we operate could materially affect our business and future results of operations.

During periods of high unemployment, governmental entities often experience budget deficits as a result of increased costs and lower than expected tax collections. These budget deficits at the federal, state and local levels have decreased, and may continue to decrease, spending for health and human service programs, including Medicare and Medicaid in the United States, which are significant payor sources for our facilities. In periods of high unemployment, we also face the risk of potential declines in the population covered under private insurance, patient decisions to postpone or decide against receiving behavioral healthcare services, potential increases in the uninsured and underinsured populations we serve and further difficulties in collecting patient co-payment and deductible receivables.

Furthermore, the availability of liquidity and capital resources to fund the continuation and expansion of many business operations worldwide has been limited in recent years. Our ability to access the capital markets on acceptable terms may be severely restricted at a time when we would like, or need, access to those markets, which could have a negative impact on our growth plans, our flexibility to react to changing economic and business conditions and our ability to refinance existing debt (including debt under our Amended and Restated Senior Credit Facility and Senior Notes). The recent economic downturn or other economic conditions could also adversely affect the counterparties to our agreements, including the lenders under the Amended and Restated Senior Credit Facility, causing them to fail to meet their obligations to us.

If we fail to comply with extensive laws and government regulations, we could suffer penalties or be required to make significant changes to our operations.

Companies operating in the behavioral healthcare industry in the United States are required to comply with extensive and complex laws and regulations at the federal, state and local government levels relating to, among other things: billing practices and prices for services; relationships with physicians and other referral sources; necessity and quality of medical care; condition and adequacy of facilities; qualifications of medical and support personnel; confidentiality, maintenance and security issues associated with health-related information and patient health information, or PHI; the screening, stabilization and/or transfer of patients who have emergency medical conditions; certification, licensure and accreditation of our facilities; operating policies and procedures; activities regarding competitors; and addition or expansion of facilities and services.

Among these laws are the anti-kickback provision of the Social Security Act, or the Anti-Kickback Statute, the federal physician self-referral, or the Stark Law, the federal False Claims Act, or the False Claims Act, and similar state laws. These laws, and particularly the Anti-Kickback Statute and the Stark Law, impact the relationships that we may have with physicians and other potential referral sources. We have a variety of financial relationships with physicians and other professionals who refer patients to our facilities, including employment contracts, leases and professional service agreements. The Office of the Inspector General of the Department of Health and Human Services has issued certain exceptions and safe harbor regulations that outline practices that are deemed acceptable under the Stark Law and Anti-Kickback Statute. While we endeavor to comply with applicable exceptions and safe harbors, certain of our current arrangements with physicians and other potential referral sources may not qualify for safe harbor protection. Failure to meet a safe harbor does not mean that the arrangement necessarily violates the Anti-Kickback Statute, but may subject the arrangements to greater scrutiny. We cannot offer assurances that practices that are outside of a safe harbor will not be found to violate the Anti-Kickback Statute. Allegations of violations of the Stark Law and Anti-Kickback Statute may be brought under the federal Civil Monetary Penalty Law, which requires a lower burden of proof than other fraud and abuse laws.

These laws and regulations are extremely complex, and, in many cases, we do not have the benefit of regulatory or judicial interpretation. In the future, it is possible that different interpretations of these laws and regulations could subject our current or past practices to allegations of impropriety or illegality or could require us to make changes in our arrangements for facilities, equipment, personnel, services, capital expenditure programs and operating expenses. A determination that we have violated one or more of these laws could subject us to liabilities, including civil penalties, exclusion of one or more facilities from participation in the government healthcare programs and, for violations of certain laws and regulations, criminal penalties. Even the public announcement that we are being investigated for possible violations of these laws could cause our reputation to suffer and have a material adverse effect on our business, financial condition or results of operations. In addition, we cannot predict whether other legislation or regulations at the federal or state level will be adopted, what form such legislation or regulations may take or what their impact on us may be.

The construction and operation of healthcare facilities in the United States are subject to extensive federal, state and local regulation relating to, among other things, the adequacy of medical care, equipment, personnel, operating policies and procedures, fire prevention, rate-setting, compliance with building codes and environmental protection. Additionally, such facilities are subject to periodic inspection by government authorities to assure their continued compliance with these various standards. If we fail to adhere to these standards, we could be subject to monetary and operational penalties.

Many of our U.S. facilities are also accredited by third-party accreditation agencies such as The Joint Commission. If any of our existing healthcare facilities lose their accreditation or any of our new facilities fail to receive accreditation, such facilities could become ineligible to receive reimbursement under Medicare or Medicaid.

Similarly, providers of behavioral healthcare services in the United Kingdom are also subject to a highly regulated business environment. Failure to comply with regulations, lapses in the standards of care, the receipt of poor ratings or lower ratings, the receipt of a negative report that leads to a determination of regulatory noncompliance, or the failure to cure any defect noted in an inspection report could lead to substantial penalties, including the loss of registration or closure of one or more facilities as well as damage to reputation.

Our facilities acquired from Partnerships in Care operate in a highly regulated business environment, which is subject to political and regulatory scrutiny. Failure to comply with regulations or the introduction of new regulations or standards with which Partnerships in Care does not comply could lead to substantial penalties, including the loss of registration on one or more of our facilities.

The business of the facilities acquired from Partnerships in Care is subject to a high level of regulation and oversight, in particular from: the Care Quality Commission (“CQC”), the independent regulator for health and adult social care in England; Healthcare Improvement Scotland (“HIS”), the independent regulator for healthcare services in Scotland; Healthcare Inspectorate Wales (“HIW”), the independent regulator of for all healthcare services in Wales; and Monitor, the non-departmental public body of the United Kingdom government that serves as the sector regulator for health services in England. The regulatory requirements relevant to Partnerships in Care’s business span the range of Partnerships in Care’s operations from the establishment of new facilities, which are subject to registration requirements, to the recruitment and appointment of staff, occupational health and safety, duty of care to the people Partnerships in Care supports, administration of controlled drugs, clinical standards, conduct of Partnerships in Care’s professional and care staff and other requirements.

Inspections by regulators can be carried out on both an announced and, in most cases, unannounced basis, depending on the specific regulatory provisions relating to the different services Partnerships in Care provides. A failure to comply with regulations in the future, the receipt of poor ratings or lower ratings, the receipt of a negative report that leads to a determination of regulatory noncompliance, or Partnerships in Care’s failure to cure any defect noted in an inspection report could result in reputational damage to Partnerships in Care, fines, or the revocation or suspension of the registration or closure of any care facility or service. Additionally, as placing authorities monitor performance, negative changes in regulatory compliance may affect the number of referrals made to Partnerships in Care. In addition, frequent changes are made to regulatory assessment methods.

We cannot guarantee that current laws, regulations and regulatory assessment methodologies will not be modified or replaced in the future. Such future developments and amendments may negatively impact Partnerships in Care’s operations which could have a material adverse effect on Partnerships in Care’s business, results of operations, financial condition or prospects.

Our business in the United Kingdom relies upon maintaining strong relationships with commissioners employed by publicly funded entities and any reorganization of such publicly funded entities may result in the loss of those relationships.

The relationships that the sales and marketing function of our facilities in the United Kingdom holds with commissioners is a key driver of referrals to such facilities. Should there be a major reorganization of publicly funded entities, such as the NHS reorganization announced in 2010 and implemented between 2012 and 2013, we may need to rebuild such relationships which could result in a decrease in the number of referrals made to the Partnerships in Care facilities, which could have a corresponding material adverse effect on our business, results of operations, financial condition or prospects.

We may be required to spend substantial amounts to comply with statutes and regulations relating to privacy and security of patient health information.

There are currently numerous legislative and regulatory initiatives in both the U.S. and the United Kingdom addressing patient privacy and information security concerns. In particular, federal regulations issued under HIPAA require our U.S. facilities to comply with standards to protect the privacy, security and integrity of PHI. These regulations have imposed extensive administrative requirements, technical and physical information security requirements, restrictions on the use and disclosure of PHI and related financial information and have provided patients with additional rights with respect to their health information. Compliance with these regulations requires substantial expenditures, which could negatively impact our business, financial condition or results of operations. In addition, our management has spent, and may spend in the future, substantial time and effort on compliance measures.

Violations of the privacy and security regulations could subject our operations to substantial civil monetary penalties and substantial other costs and penalties associated with a breach of data security, including criminal penalties.

We may be subject to liabilities from claims brought against our facilities.

We are subject to medical malpractice lawsuits and other legal actions in the ordinary course of business. Some of these actions may involve large claims, as well as significant defense costs. We cannot predict the outcome of these lawsuits or the effect that findings in such lawsuits may have on us. All professional and general liability insurance we purchase is subject to policy limitations. Management believes that, based on our past experience and actuarial estimates, our insurance coverage is adequate considering the claims arising from the operations of our facilities. While we continuously monitor our coverage, our ultimate liability for professional and general liability claims could change materially from our current estimates. If such policy limitations should be partially or fully exhausted in the future, or payments of claims exceed our estimates or are not covered by our insurance, it could have a material adverse effect on our business, financial condition or results of operations.

We have been and could become the subject of governmental investigations, regulatory actions and whistleblower lawsuits.

Healthcare companies in both the United States and the United Kingdom are subject to numerous investigations by various governmental agencies. Certain of our facilities have received, and other facilities may receive, government inquiries from, and may be subject to investigation by, governmental agencies. Depending on whether the underlying conduct in these or future inquiries or investigations could be considered systemic, their resolution could have a material adverse effect on our business, financial condition and results of operations.

Further, under the federal False Claims Act, private parties are permitted to bring qui tam or “whistleblower” lawsuits against companies that submit false claims for payments to, or improperly retain overpayments from, the government. Because qui tam lawsuits are filed under seal, we could be named in one or more such lawsuits of which we are not aware.

We are subject to uncertainties regarding recent health reform and budget legislation.

The expansion of health insurance coverage in the United States under the Patient Protection and Affordable Care Act and the Reconciliation Act, or, collectively, the Health Reform Legislation, may increase the number of patients using our facilities who have either private or public program coverage. In addition, a disproportionately large percentage of new Medicaid coverage is likely to be in states that currently have relatively low income eligibility requirements and may include states where we have facilities. Furthermore, as a result of the Health Reform Legislation, there may be a reduction in uninsured patients, which should reduce our expense from uncollectible accounts receivable.

Notwithstanding the foregoing, the Health Reform Legislation makes a number of other changes to Medicare and Medicaid which management believes may have an adverse impact on us. The various provisions in the Health Reform Legislation that directly or indirectly affect reimbursement are scheduled to take effect over a number of years. Health Reform Legislation provisions are likely to be affected by the incomplete nature of implementing regulations or expected forthcoming interpretive guidance, gradual implementation or future legislation. Further, Health Reform Legislation provisions, such as those creating the Medicare Shared Savings Program and the Independent Payment Advisory Board, create certain flexibilities in how healthcare may be reimbursed by federal programs in the future. Thus, we cannot predict the impact of the Health Reform Legislation on our future reimbursement at this time.

The Health Reform Legislation also contains provisions aimed at reducing fraud and abuse in healthcare. The Health Reform Legislation amends several existing laws, including the federal Anti-Kickback Statute and the False Claims Act, making it easier for government agencies and private plaintiffs to prevail in lawsuits brought against healthcare providers. Congress revised the intent requirement of the Anti-Kickback Statute to provide that a person is not required to have actual knowledge or specific intent to commit a violation of the Anti-Kickback Statute in order to be found guilty of violating such law. The Health Reform Legislation also provides that any claims for items or services that violate the Anti-Kickback Statute are also considered false claims for purposes of the federal civil False Claims Act. The Health Reform Legislation provides that a healthcare provider that knowingly retains an overpayment in excess of 60 days is subject to the federal civil False Claims Act.

The impact of the Health Reform Legislation on each of our facilities may vary. We cannot predict the impact the Health Reform Legislation may have on our business, results of operations, cash flow, capital resources and liquidity, or whether we will be able to adapt successfully to the changes required by the Health Reform Legislation.

We are similarly unable to guarantee that current United Kingdom laws, regulations and regulatory assessment methodologies will not be modified or replaced in the future. Additionally, there is a risk that budget constraints, public spending cuts (such as the cuts announced by the United Kingdom government in the 2010 Comprehensive Spending Review and implemented in the 2011 and 2012 government budgets) or other financial pressures could cause NHS to reduce funding for the types of services that Partnerships in Care provides. Such policy changes in the United Kingdom could lead to fewer services being purchased by publicly funded entities or material changes being made to their procurement practices, any of which could materially reduce Partnerships in Care’s revenue. These and other future developments and amendments may negatively impact our operations, which could have a material adverse effect on our business, financial condition or results of operations.

We operate in a highly competitive industry, and competition may lead to declines in patient volumes.

The healthcare industry is highly competitive, and competition among healthcare providers (including hospitals) for patients, physicians and other healthcare professionals has intensified in recent years. There are other healthcare facilities that provide behavioral and other mental health services comparable to at least some of those offered by our facilities in each of the geographical areas in which we operate. Some of our competitors are owned by tax-supported governmental agencies or by nonprofit corporations and may have certain financial advantages not available to us, including endowments, charitable contributions, tax-exempt financing and exemptions from sales, property and income taxes.

If our competitors are better able to attract patients, recruit and retain physicians and other healthcare professionals, expand services or obtain favorable managed care contracts at their facilities, we may experience a decline in patient volume and our results of operations may be adversely affected.

NHS is the principal provider of secure mental healthcare services in the United Kingdom, with approximately 70% of the totals beds in the United Kingdom. As the preferred provider, there is a bias toward referrals to NHS, and therefore NHS facilities have maintained high occupancy rates. As a result of budget constraints, independent operators have emerged to satisfy the demand for mental health services not supplied by NHS. We face competition in the United Kingdom from other independent sector providers and publicly funded entities for individuals requiring care and for appropriate sites on which to develop or expand facilities in the United Kingdom. Should we fail to compete effectively with our peers and competitors in the industry, or if the competitive environment intensifies, individuals may be referred elsewhere for services that we provide, negatively impacting our ability to secure referrals and limiting the expansion of our business.

The trend by insurance companies and managed care organizations to enter into sole-source contracts may limit our ability to obtain patients.

Insurance companies and managed care organizations in the United States are entering into sole-source contracts with healthcare providers, which could limit our ability to obtain patients since we do not offer the range of services required for these contracts. Moreover, private insurers, managed care organizations and, to a lesser extent, Medicaid and Medicare, are beginning to carve-out specific services, including mental health and substance abuse services, and establish small, specialized networks of providers for such services at fixed reimbursement rates. Continued growth in the use of carve-out arrangements could materially adversely affect our business to the extent we are not selected to participate in such networks or if the reimbursement rate is not adequate to cover the cost of providing the service.

Our performance depends on our ability to recruit and retain quality psychiatrists and other physicians.

The success and competitive advantage of our facilities depends, in part, on the number and quality of the psychiatrists and other physicians on the medical staffs of our facilities and our maintenance of good relations with those medical professionals. Although we employ psychiatrists and other physicians at many of our facilities, psychiatrists and other physicians generally are not employees of our facilities, and, in a number of our markets, they have admitting privileges at competing hospitals providing acute or inpatient behavioral health services. Such physicians (including psychiatrists) may terminate their affiliation with us at any time or admit their patients to competing healthcare facilities or hospitals. If we are unable to attract and retain sufficient numbers of quality psychiatrists and other physicians by providing adequate support personnel and facilities that meet the needs of those psychiatrists and other physicians, they may stop referring patients to our facilities and our results of operations may decline.

It may become difficult for us to attract and retain an adequate number of psychiatrists and other physicians to practice in certain of the communities in which our facilities are located. Our failure to recruit psychiatrists and other physicians to these communities or the loss of such medical professionals in these communities could make it more difficult to attract patients to our facilities and thereby may have a material adverse effect on our business, financial condition or results of operations. Additionally, our ability to recruit psychiatrists and other physicians is closely regulated. The form, amount and duration of assistance we can provide to recruited psychiatrists and other physicians is limited by the Stark Law, the Anti-Kickback Statute, state anti-kickback statutes, and related regulations. For example, the Stark Law requires, among other things, that recruitment assistance can be provided only to psychiatrists and other physicians who meet certain geographic and practice relocation requirements, that the amount of assistance cannot be changed during the term of the recruitment agreement, and that the recruitment payments cannot generally benefit psychiatrists and other physicians currently in practice in the community beyond recruitment costs actually incurred by them.

Our facilities face competition for staffing that may increase our labor costs and reduce our profitability.

Our operations depend on the efforts, abilities, and experience of our management and medical support personnel, including our therapists, nurses, pharmacists and mental health technicians, as well as our psychiatrists and other professionals. We compete with other healthcare providers in recruiting and retaining qualified management, physicians (including psychiatrists) and support personnel responsible for the daily operations of our business, financial condition or results of operations.

The nationwide shortage of nurses and other medical support personnel in the United States has been a significant operating issue facing us and other healthcare providers. This shortage may require us to enhance wages and benefits to recruit and retain nurses and other medical support personnel or require us to hire more expensive temporary or contract personnel. In addition, certain of our facilities are required to maintain specified staffing levels. To the extent we cannot meet those levels, we may be required to limit the services provided by these facilities, which would have a corresponding adverse effect on our net operating revenues.

Increased labor union activity is another factor that could adversely affect our labor costs. As of June 30, 2014, labor unions represented employees at only six of our 52 facilities. With the acquisition of Partnerships in Care, the Royal College of Nursing represents nursing employees at all of our facilities in the United Kingdom. To the extent that a greater portion of our employee base unionizes, it is possible that our labor costs could increase materially.

We cannot predict the degree to which we will be affected by the future availability or cost of attracting and retaining talented medical support staff. If our general labor and related expenses increase, we may not be able to raise our rates correspondingly. Our failure either to recruit and retain qualified management, psychiatrists, therapists, nurses and other medical support personnel or control our labor costs could have a material adverse effect on our results of operations.

We depend heavily on key management personnel, and the departure of one or more of our key executives or a significant portion of our local facility management personnel could harm our business.

The expertise and efforts of our senior executives and the chief executive officer, chief financial officer, medical director, physicians and other key members of our facility management personnel are critical to the success of our business. The loss of the services of one or more of our senior executives or of a significant portion of our facility management personnel could significantly undermine our management expertise and our ability to provide efficient, quality healthcare services at our facilities, which could harm our business.

The Partnerships in Care senior management team was important to our acquisition of Partnerships in Care. The loss of members of the Partnerships in Care management team could impact our ability to successfully integrate and operate the Partnerships in Care facilities and business.

We could face risks associated with, or arising out of, environmental, health and safety laws and regulations.

We are subject to various federal, state and local laws and regulations that:

• regulate certain activities and operations that may have environmental or health and safety effects, such as the generation, handling and disposal of medical wastes;

• impose liability for costs of cleaning up, and damages to natural resources from, past spills, waste disposals on and off-site, or other releases of hazardous materials or regulated substances; and

• regulate workplace safety.

Compliance with these laws and regulations could increase our costs of operation. Violation of these laws may subject us to significant fines, penalties or disposal costs, which could negatively impact our results of operations, financial condition or cash flows. We could be responsible for the investigation and remediation of environmental conditions at currently or formerly operated or leased sites, as well as for associated liabilities, including liabilities for natural resource damages, third party property damage or personal injury resulting from lawsuits that could be brought by the government or private litigants, relating to our operations, the operations of facilities or the land on which our facilities are located. We may be subject to these liabilities regardless of whether we lease or own the facility, and regardless of whether such environmental conditions were created by us or by a prior owner or tenant, or by a third party or a neighboring facility whose operations may have affected such facility or land. That is because liability for contamination under certain environmental laws can be imposed on current or past owners or operators of a site without regard to fault. We cannot assure you that environmental conditions relating to our prior, existing or future sites or those of predecessor companies whose liabilities we may have assumed or acquired will not have a material adverse effect on our business, financial condition or results of operations.

State efforts to regulate the construction or expansion of healthcare facilities in the United States could impair our ability to operate and expand our operations.

A majority of the states in which we operate facilities in the United States have enacted certificate of need, or CON, laws that regulate the construction or expansion of healthcare facilities, certain capital expenditures or changes in services or bed capacity. In giving approval for these actions, these states consider the need for additional or expanded healthcare facilities or services. Our failure to obtain necessary state approval could (i) result in our inability to acquire a targeted facility, complete a desired expansion or make a desired replacement, (ii) make a facility ineligible to receive reimbursement under the Medicare or Medicaid programs or (iii) result in the revocation of a facility’s license or impose civil or criminal penalties on us, any of which could harm our business.

In addition, significant CON reforms have been proposed in a number of states that would increase the capital spending thresholds and provide exemptions of various services from review requirements. In the past, we have not experienced any material adverse effects from such requirements, but we cannot predict the impact of these changes upon our operations.

We may be unable to extend leases at expiration, which could harm our business, financial condition or results of operations.

We lease the real property on which a number of our facilities are located. Our lease agreements generally give us the right to renew or extend the term of the leases and, in certain cases, purchase the real property. These renewal and purchase rights generally are based upon either prescribed formulas or fair market value. Management expects to renew, extend or exercise purchase options with respect to our leases in the normal course of business; however, there can be no assurance that these rights will be exercised in the future or that we will be able to satisfy the conditions precedent to exercising any such renewal, extension or purchase options. Furthermore, the terms of any such options that are based on fair market value are inherently uncertain and could be unacceptable or unfavorable to us depending on the circumstances at the time of exercise. If we are not able to renew or extend our existing leases, or purchase the real property subject to such leases, at or prior to the end of the existing lease terms, or if the terms of such options are unfavorable or unacceptable to us, our business, financial condition or results of operations could be adversely affected.

Controls designed to reduce inpatient services may reduce our revenues.

Controls imposed by Medicare, Medicaid and commercial third-party payors designed to reduce admissions and lengths of stay, commonly referred to as “utilization review,” have affected and are expected to continue to affect our facilities. Inpatient utilization, average lengths of stay and occupancy rates continue to be negatively affected by payor-required preadmission authorization and utilization review and by payor pressure to maximize outpatient and alternative healthcare delivery services for less acutely ill patients. Efforts to impose more stringent cost controls are expected to continue. For example, the Health Reform Legislation potentially expands the use of prepayment review by Medicare contractors by eliminating statutory restrictions on its use. Utilization review is also a requirement of most non-governmental managed-care organizations and other third party payors. Although we are unable to predict the effect these controls and changes will have on our operations, significant limits on the scope of services reimbursed and on reimbursement rates and fees could have a material adverse effect on our financial condition and results of operations.

Additionally, the outsourcing of behavioral health care to the private sector is a relatively recent development in the United Kingdom. There has been some opposition to outsourcing. While we anticipate that NHS will continue to rely increasingly upon outsourcing, we cannot assure you that the outsourcing trend will continue. The absence of future growth in the outsourcing of behavioral healthcare services could have a material adverse impact on our business, financial condition and results of operations.

Although we have facilities in 24 states, the United Kingdom and Puerto Rico, we have substantial operations in each of the United Kingdom, Arkansas, Mississippi and Tennessee, which makes us especially sensitive to regulatory, economic, environmental and competitive conditions and changes in those locations.

On a pro forma basis at June 30, 2014, we operated 75 facilities, 33 of which are located in the United Kingdom, Arkansas, Mississippi and Tennessee. Our revenues in those facilities represented approximately 48% of our revenue for the twelve months ended June 30, 2014. This concentration makes us particularly sensitive to legislative, regulatory, economic, environmental and competition changes in those locations. Any material change in the current payment programs or regulatory, economic, environmental or competitive conditions in these locations could have a disproportionate effect on our overall business results.

In addition, some of our facilities are located in hurricane-prone areas. In the past, hurricanes have had a disruptive effect on the operations of facilities and the patient populations in hurricane-prone areas. Our business activities could be significantly disrupted by a particularly active hurricane season or even a single storm, and our property insurance may not be adequate to cover losses from such storms or other natural disasters.

We are required to treat patients with emergency medical conditions regardless of ability to pay.

In accordance with our internal policies and procedures, as well as the Emergency Medical Treatment and Active Labor Act, or EMTALA, we provide a medical screening examination to any individual who comes to one of our hospitals while in active labor and/or seeking medical treatment (whether or not such individual is eligible for insurance benefits and regardless of ability to pay) to determine if such individual has an emergency medical condition. If it is determined that such person has an emergency medical condition, we provide such further medical examination and treatment as is required to stabilize the patient’s medical condition, within the facility’s capability, or arrange for transfer of such individual to another medical facility in accordance with applicable law and the treating hospital’s written procedures. Our obligations under EMTALA may increase substantially; Centers for Medicare and Medicaid Services has recently sought stakeholder comments concerning the potential applicability of EMTALA to hospital inpatients and the responsibilities of hospitals with specialized capabilities, such as ours, to accept the transfer of such patients. If the number of indigent and charity care patients with emergency medical conditions we treat increases significantly, or if regulations expanding our obligations to inpatients under EMTALA are proposed and adopted, our results of operations may be harmed.

An increase in uninsured or underinsured patients or the deterioration in the collectability of the accounts of such patients could harm our results of operations.

Collection of receivables from third-party payors and patients is critical to our operating performance. Our primary collection risks relate to uninsured patients and the portion of the bill that is the patient’s responsibility, which primarily includes co-payments and deductibles. We estimate our provisions for doubtful accounts based on general factors such as payor source, the agings of the receivables and historical collection experience. At June 30, 2014, our allowance for doubtful accounts represented approximately 18% of our accounts receivable balance as of such date. We routinely review accounts receivable balances in conjunction with these factors and other economic conditions that might ultimately affect the collectability of the patient accounts and make adjustments to our allowances as warranted. Significant changes in business office operations, payor mix, economic conditions or trends in federal and state governmental health coverage (including implementation of the Health Reform Legislation) could affect our collection of accounts receivable, cash flow and results of operations. If we experience unexpected increases in the growth of uninsured and underinsured patients or in bad debt expenses, our results of operations will be harmed.

A cyber security incident could cause a violation of HIPAA and other privacy laws and regulations or result in a loss of confidential data.

A cyber-attack that bypasses our information technology, or IT, security systems causing an IT security breach, loss of PHI or other data subject to privacy laws, loss of proprietary business information, or a material disruption of our IT business systems, could have a material adverse impact on our business, financial condition or results of operations. In addition, our future results of operations, as well as our reputation, could be adversely impacted by theft, destruction, loss, or misappropriation of PHI, other confidential data or proprietary business information.

Failure to maintain effective internal control over financial reporting in accordance with Section 404 of Sarbanes-Oxley, could have a material adverse effect on our business.

We are required to maintain internal control over financial reporting under Section 404 of Sarbanes-Oxley. If we are unable to maintain adequate internal control over financial reporting, we may be unable to report our financial information on a timely basis, may suffer adverse regulatory consequences or violations of NASDAQ listing rules and may breach the covenants under our financing arrangements. There could also be a negative reaction in the financial markets due to a loss of investor confidence in us and the reliability of our financial statements. Confidence in our financial statements is also likely to suffer if we or our independent registered public accounting firm report a material weakness in our internal control over financial reporting.

As part of the acquisition of Partnerships in Care, we assumed Partnerships in Care’s existing pension plans and a defined contribution plan and are responsible for an underfunded pension liability. In addition, we may be required to increase funding of the pension plans and/or be subject to restrictions on the use of excess cash.

Partnerships in Care is the sponsor of a defined benefit pension plan (the Partnerships in Care Limited Pension and Life Assurance Plan) that covers approximately 187 members in the United Kingdom, most of whom are inactive and retired former employees. As of May 1, 2005, this plan was closed to new participants but then-current participants continue to accrue benefits. As of December 31, 2013, the net deficit recognized under UK GAAP in respect of this scheme was £4.9 million. Although this underfunded position was considered in determining the purchase price for Partnerships in Care, it may adversely affect the combined company as follows:

• Laws and regulations normally require a new funding plan to be agreed upon every three years, with the next new funding plan to be agreed upon with the plan trustees by March 2015. Changes in actuarial assumptions, including future discount, inflation and interest rates, investment returns and mortality rates, may increase the underfunded position of the pension plan and cause the combined company to increase its contributions to the pension plan to cover underfunded liabilities.

• The pension plan is regulated in the United Kingdom, and trustees represent the interests of covered workers. Laws and regulations could create an immediate funding obligation to the pension plan which could be significantly greater than the £5 million assumed for accounting purposes as of December 31, 2013, and could impact the ability to use Partnerships in Care’s existing cash or the combined company’s future excess cash to grow the business or finance other obligations. The use of Partnerships in Care’s cash and future cash flows beyond the operation of Partnerships in Care’s business or the satisfaction of Partnerships in Care’s obligations would require negotiations with the trustees and regulators.

We also assumed an additional pension plan (the Federated Pension Plan), of which fewer than five Partnerships in Care employees are participants, and a defined contribution plan (the Partnerships in Care Limited New Generation Personal Pension) under which participants receive contributions as a proportion of earnings. Maintenance of these plans may result in additional expenses. Termination of these plans could have an adverse impact on employee relations and a material adverse effect on our financial results.

Future sales of common stock by our existing stockholders may cause our stock price to fall.

The market price of our common stock could decline as a result of sales by our existing stockholders in the market, or the perception that these sales could occur. These sales might also make it more difficult for us to sell equity securities at a time and price that we deem appropriate.

Waud Capital Partners, L.L.C. (“Waud Capital Partners”) and certain of its affiliates, along with certain members of our management, have certain demand and piggyback registration rights with respect to shares of our common stock beneficially owned by them. The presence of additional shares of our common stock trading in the public market, as a result of the exercise of such registration rights, may have an adverse effect on the market price of our securities.

If securities or industry analysts do not publish research or reports about our business, if they were to change their recommendations regarding our stock adversely or if our operating results do not meet their expectations, our stock price and trading volume could decline.

The trading market for our common stock will be influenced by the research and reports that industry or securities analysts publish about us. If one or more of these analysts cease coverage of us or fail to publish regular reports on us, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline. Moreover, if one or more of the analysts who cover us downgrade our stock or if our operating results do not meet their expectations, our stock price could decline.

We incur substantial costs as a result of being a public company.

As a public company, we incur significant legal, accounting, insurance and other expenses, including costs associated with public company reporting requirements. We incur costs associated with complying with the requirements of the Sarbanes-Oxley Act of 2002, or Sarbanes-Oxley, the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act, and related rules implemented by the SEC and NASDAQ. Enacted in July 2010, the Dodd-Frank Act contains significant corporate governance and executive compensation-related provisions, some of which the SEC has recently implemented by adopting additional rules and regulations in areas such as executive compensation. The expenses incurred by public companies generally for reporting and corporate governance purposes have been increasing. Management expects these laws and regulations to increase our legal and financial compliance costs and to make some activities more time consuming and costly, although management is currently unable to estimate these costs with any degree of certainty. These laws and regulations could make it more difficult or costly for us to obtain certain types of insurance, including director and officer liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. These laws and regulations could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as our executive officers. Furthermore, if we are unable to satisfy our obligations as a public company, we could be subject to delisting of our common stock, fines, sanctions and other regulatory action and potentially civil litigation.

We are party to a stockholders agreement with Waud Capital Partners which provides it with certain rights over Company matters.

Waud Capital Partners owns approximately 19.7% of our outstanding common stock. In accordance with the terms of the stockholders agreement among Waud Capital Partners, Acadia and certain current and former members of our management, for so long as Waud Capital Partners owns at least 17.5% of our outstanding common stock, it is entitled to designate the pro rata number of our directors that is proportional (but rounded up to the nearest whole number) to its percentage ownership of our outstanding common stock, subject to the NASDAQ rules regarding director independence, and has consent rights to many corporate actions, such as issuing equity or debt securities, paying dividends, acquiring any interest in another company and materially changing our business activities. It is possible that the interests of Waud Capital Partners may in some circumstances conflict with our interests and the interests of our stockholders.

Provisions of our charter documents or Delaware law could delay or prevent an acquisition of us, even if the acquisition would be beneficial to our stockholders, and could make it more difficult for stockholders to change management.

Provisions of our amended and restated certificate of incorporation and amended and restated bylaws may discourage, delay or prevent a merger, acquisition or other change in control that stockholders may consider favorable, including transactions in which stockholders might otherwise receive a premium for their shares. This is because these provisions may prevent or frustrate attempts by stockholders to replace or remove our management. These provisions include:

• a classified board of directors;

• a prohibition on stockholder action through written consent;

• a requirement that special meetings of stockholders be called only upon a resolution approved by a majority of our directors then in office;

• advance notice requirements for stockholder proposals and nominations; and

• the authority of the board of directors to issue preferred stock with such terms as the board of directors may determine.

Section 203 of the Delaware General Corporation Law (“DGCL”) prohibits a publicly-held Delaware corporation from engaging in a business combination with an interested stockholder, generally a person that together with its affiliates owns or within the last three years has owned 15% of voting stock, for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business combination is approved in a prescribed manner. Although we have elected not to be subject to Section 203 of the DGCL, our amended and restated certificate of incorporation contains provisions that have the same effect as Section 203, except that they provide that Waud Capital Partners, its affiliates and any investment fund managed by Waud Capital Partners and any persons to whom Waud Capital Partners sells at least five percent (5%) of our outstanding voting stock will be deemed to have been approved by our board of directors, and thereby not subject to the restrictions set forth in our amended and restated certificate of incorporation that have the same effect as Section 203 of the DGCL. Accordingly, the provision in our amended and restated certificate of incorporation that adopts a modified version of Section 203 of the DGCL may discourage, delay or prevent a change in control of us.

As a result of these provisions in our charter documents and Delaware law, the price investors may be willing to pay in the future for shares of our common stock may be limited.

We do not anticipate paying any cash dividends in the foreseeable future.

We intend to retain our future earnings, if any, for use in our business or for other corporate purposes and do not anticipate that cash dividends with respect to common stock will be paid in the foreseeable future. Any decision as to the future payment of dividends will depend on our results of operations, financial position and such other factors as our board of directors, in its discretion, deems relevant. In addition, the terms of our debt substantially limit our ability to pay dividends. As a result, capital appreciation, if any, of our common stock will be a stockholder’s sole source of gain for the foreseeable future.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

During the three months ended June 30, 2014, the Company withheld shares of Company common stock to satisfy employee minimum statutory tax withholding obligations payable upon the vesting of restricted stock, as follows:

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
April 1 – April 30		—				—		—
May 1 – May 31		1,696	$	42.80		—		—
June 1 – June 30		—				—		—
Total		1,696

Item 6. Exhibits

Exhibit No.	Exhibit Description
2.1	Agreement, dated June 3, 2014, by and among Partnerships in Care Holdings Limited, The Royal Bank of Scotland plc, Piper Holdco 2, Ltd. and Acadia Healthcare Company Inc. (the “Company”). (1)
3.1	Amended and Restated Certificate of Incorporation, as filed on October 28, 2011 with the Secretary of State of the State of Delaware (2).
3.2	Amended and Restated Bylaws of the Company. (2).
4.1	Supplemental Indenture, dated as of June 17, 2014, to the Indentures, dated as of November 1, 2011, among the Company, the Guarantors named therein and U.S. Bank National Association, as Trustee. (3)
4.2	Indenture, dated as of July 1, 2014, among the Company, the Guarantors named therein and U.S. Bank National Association, as Trustee. (4)
4.3	Form of 5.125% Senior Note due 2021. (Included in Exhibit 4.2)
4.4	Registration Rights Agreement, dated July 1, 2014, among the Company, the Guarantors named therein and Merrill Lynch, Pierce, Fenner & Smith Incorporated and Jefferies LLC. (4)
10.1	Amended and Restated Employment Agreement, dated April 7, 2014, among the Company, Acadia Management Company, Inc. and Joey A. Jacobs. (5)
10.2	Amended and Restated Employment Agreement, dated April 7, 2014, among the Company, Acadia Management Company, Inc. and Brent Turner. (5)
10.3	Amended and Restated Employment Agreement, dated April 7, 2014, among the Company, Acadia Management Company, Inc. and Ronald M. Fincher. (5)
10.4	Amended and Restated Employment Agreement, dated April 7, 2014, among the Company, Acadia Management Company, Inc. and Christopher L. Howard. (5)
10.5	Employment Agreement, dated as of April 7, 2014, by and among the Company, Acadia, Management Company, Inc. and David M. Duckworth. (5)
10.6	Underwriting Agreement, dated June 11, 2014 by and among the Company, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Jefferies LLC, as representatives of the several underwriters named therein, and the Selling Stockholder. (6)
10.7	Purchase Agreement, dated June 17, 2014, by and among the Company, the Guarantors, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Jefferies LLC as representative of the initial purchasers named therein. (3)
10.8	Fifth Amendment, dated June 16, 2014, to the Amended and Restated Credit Agreement, dated December 31, 2012, by and among Bank of America, NA (Administrative Agent, Swing Line Lender and L/C Issuer) and the Company (f/k/a Acadia Healthcare Company, LLC), the guarantors listed on the signature pages thereto, and the lenders listed on the signature pages thereto.
31.1*	Certification of the Chief Executive Officer of the Company pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of the Chief Financial Officer of the Company pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32*	Certification of Chief Executive Officer and Chief Financial Officer of the Company pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS**	XBRL Instance Document.
101.SCH**	XBRL Taxonomy Extension Schema Document.
101.CAL**	XBRL Taxonomy Calculation Linkbase Document.
101.DEF**	XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB**	XBRL Taxonomy Labels Linkbase Document.
101.PRE**	XBRL Taxonomy Presentation Linkbase Document.

(1) Incorporated by reference to exhibits filed with the Company’s Current Report on Form 8-K filed June 6, 2014 (File No.

001-35331).

(2) Incorporated by reference to exhibits filed with the Company’s Current Report on Form 8-K filed November 1, 2011 (File No.

001-35331).

(3) Incorporated by reference to exhibits filed with the Company’s Current Report on Form 8-K filed June 18, 2014 (File No.

001-35331).

(4) Incorporated by reference to exhibits filed with the Company’s Current Report on Form 8-K filed July 2, 2014 (File No.

001-35331).

(5) Incorporated by reference to exhibits filed with the Company’s Current Report on Form 8-K filed April 11, 2014 (File No.

001-35331).

(6) Incorporated by reference to exhibits filed with the Company’s Current Report on Form 8-K filed June 12, 2014 (File No.

001-35331).

(7) Incorporated by reference to exhibits filed with the Company’s Current Report on Form 8-K filed June 17, 2014 (File No.

001-35331).

* Filed herewith.

** The XBRL related information in Exhibit 101 to this quarterly report on Form 10-Q shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability of that section and shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document.

SIGNATURES

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

Acadia Healthcare Company, Inc.
By:	/s/ David M. Duckworth
	David M. Duckworth Chief Financial Officer

Dated: July 30, 2014

EXHIBIT INDEX

Exhibit No.	Exhibit Description
2.1	Agreement, dated June 3, 2014, by and among Partnerships in Care Holdings Limited, The Royal Bank of Scotland plc, Piper Holdco 2, Ltd. and Acadia Healthcare Company Inc. (the “Company”). (1)
3.1	Amended and Restated Certificate of Incorporation, as filed on October 28, 2011 with the Secretary of State of the State of Delaware (2).
3.2	Amended and Restated Bylaws of the Company. (2).
4.1	Supplemental Indenture, dated as of June 17, 2014, to the Indentures, dated as of November 1, 2011, among the Company, the Guarantors named therein and U.S. Bank National Association, as Trustee. (3)
4.2	Indenture, dated as of July 1, 2014, among the Company, the Guarantors named therein and U.S. Bank National Association, as Trustee. (4)
4.3	Form of 5.125% Senior Note due 2021. (Included in Exhibit 4.2)
4.4	Registration Rights Agreement, dated July 1, 2014, among the Company, the Guarantors named therein and Merrill Lynch, Pierce, Fenner & Smith Incorporated and Jefferies LLC. (4)
10.1	Amended and Restated Employment Agreement, dated April 7, 2014, among the Company, Acadia Management Company, Inc. and Joey A. Jacobs. (5)
10.2	Amended and Restated Employment Agreement, dated April 7, 2014, among the Company, Acadia Management Company, Inc. and Brent Turner. (5)
10.3	Amended and Restated Employment Agreement, dated April 7, 2014, among the Company, Acadia Management Company, Inc. and Ronald M. Fincher. (5)
10.4	Amended and Restated Employment Agreement, dated April 7, 2014, among the Company, Acadia Management Company, Inc. and Christopher L. Howard. (5)
10.5	Employment Agreement, dated as of April 7, 2014, by and among the Company, Acadia, Management Company, Inc. and David M. Duckworth. (5)
10.6	Underwriting Agreement, dated June 11, 2014 by and among the Company, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Jefferies LLC, as representatives of the several underwriters named therein, and the Selling Stockholder. (6)
10.7	Purchase Agreement, dated June 17, 2014, by and among the Company, the Guarantors, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Jefferies LLC as representative of the initial purchasers named therein. (3)
10.8	Fifth Amendment, dated June 16, 2014, to the Amended and Restated Credit Agreement, dated December 31, 2012, by and among Bank of America, NA (Administrative Agent, Swing Line Lender and L/C Issuer) and the Company (f/k/a Acadia Healthcare Company, LLC), the guarantors listed on the signature pages thereto, and the lenders listed on the signature pages thereto.
31.1*	Certification of the Chief Executive Officer of the Company pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of the Chief Financial Officer of the Company pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32*	Certification of Chief Executive Officer and Chief Financial Officer of the Company pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS**	XBRL Instance Document.
101.SCH**	XBRL Taxonomy Extension Schema Document.
101.CAL**	XBRL Taxonomy Calculation Linkbase Document.
101.DEF**	XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB**	XBRL Taxonomy Labels Linkbase Document.
101.PRE**	XBRL Taxonomy Presentation Linkbase Document.

(1) Incorporated by reference to exhibits filed with the Company’s Current Report on Form 8-K filed June 6, 2014 (File No.

001-35331).

(2) Incorporated by reference to exhibits filed with the Company’s Current Report on Form 8-K filed November 1, 2011 (File No.

001-35331).

(3) Incorporated by reference to exhibits filed with the Company’s Current Report on Form 8-K filed June 18, 2014 (File No.

001-35331).

(4) Incorporated by reference to exhibits filed with the Company’s Current Report on Form 8-K filed July 2, 2014 (File No.

001-35331).

(5) Incorporated by reference to exhibits filed with the Company’s Current Report on Form 8-K filed April 11, 2014 (File No.

001-35331).

(6) Incorporated by reference to exhibits filed with the Company’s Current Report on Form 8-K filed June 12, 2014 (File No.

001-35331).

(7) Incorporated by reference to exhibits filed with the Company’s Current Report on Form 8-K filed June 17, 2014 (File No.

001-35331).

* Filed herewith.

** The XBRL related information in Exhibit 101 to this quarterly report on Form 10-Q shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability of that section and shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document.

XML

Acquisitions - Additional Information (Detail) (USD $)	3 Months Ended		6 Months Ended		3 Months Ended		6 Months Ended			0 Months Ended		6 Months Ended				0 Months Ended	6 Months Ended		0 Months Ended		0 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014 Pro Forma Information [Member]	Jun. 30, 2013 Pro Forma Information [Member]	Jun. 30, 2014 Pro Forma Information [Member]	Jun. 30, 2013 Pro Forma Information [Member]	Jul. 01, 2014 Subsequent Event [Member]	Jan. 02, 2014 Pacific Grove [Member]	Jan. 02, 2014 Pacific Grove [Member] Behavioral Healthcare Facilities [Member] Beds	Jun. 30, 2014 Cascade Behavioral Hospital [Member]	Jun. 30, 2014 Longleaf Hospital [Member]	Jun. 30, 2014 The Refuge [Member]	Jun. 30, 2014 UMC Facilities [Member]	May 01, 2013 UMC Facilities [Member] Behavioral Healthcare Facilities [Member] Facility	Jun. 30, 2014 Delta Medical Center [Member]	Jun. 30, 2014 Greenleaf Center [Member]	Jul. 01, 2014 PiC Acquisition [Member] Subsequent Event [Member] Facility Beds	Jul. 01, 2014 PiC Acquisition [Member] Subsequent Event [Member] Beds	Jul. 01, 2014 PiC Acquisition [Member] Subsequent Event [Member] 5.125% Senior Notes due 2022 [Member]	Jul. 01, 2014 PiC Acquisition [Member] Subsequent Event [Member] Foreign Exchange Contract [Member]
Business Acquisition [Line Items]
Cash consideration of acquired entity										$ 10,500,000
Number of acute inpatient psychiatric beds											68									1,200
Acquisition completion date												Dec. 01, 2013	Oct. 01, 2013	Aug. 01, 2013	May 01, 2013		Jan. 31, 2013	Jan. 01, 2013	Jul. 01, 2014
Number of facilities acquired																2			23
Total consideration related to acquisition																			662,000,000
Cash consideration related to acquisition																				12,000,000
Fair value of the foreign currency derivative									15,300,000													15,300,000
Proceeds from issuance of debt																					300,000,000
Net proceeds from sale of share			374,336,000	0															374,300,000
Debt instrument maturity date																			Jul. 01, 2022
Issue rate of senior notes																				5.125%
Revenue	286,675,000	254,408,000	557,568,000	500,496,000	34,200,000	18,200,000	67,700,000	28,100,000
Income from continuing operations, before income taxes	$ 23,616,000	$ 9,924,000	$ 30,471,000	$ 6,913,000	$ 2,500,000	$ 900,000	$ 4,700,000	$ 2,300,000

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Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2014

Earnings Per Share [Abstract]

Computation of Basic and Diluted Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share for the three months ended June 30, 2014 and 2013 (in thousands except per share amounts):

	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014		2013
Numerator:
Basic and diluted earnings per share:
Income from continuing operations	$	22,457		$	12,271		$	35,478	$	16,325
(Loss) income from discontinued operations		(6	)		(74	)		31		(390	)
Net income	$	22,451		$	12,197		$	35,509	$	15,935
Denominator:
Weighted average shares outstanding for basic earnings per share		51,616			50,009			50,872		49,961
Effect of dilutive instruments		203			273			302		235
Shares used in computing diluted earnings per common share		51,819			50,282			51,174		50,196
Basic earnings per share:
Income from continuing operations	$	0.43		$	0.24		$	0.70	$	0.33
(Loss) income from discontinued operations		—			—			—		(0.01	)
Net income	$	0.43		$	0.24		$	0.70	$	0.32
Diluted earnings per share:
Income from continuing operations	$	0.43		$	0.24		$	0.69	$	0.33
(Loss) income from discontinued operations		—			—			—		(0.01	)
Net income	$	0.43		$	0.24		$	0.69	$	0.32

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Operating activities:
Net income	$ 35,509	$ 15,935
Adjustments to reconcile net income to net cash provided by continuing operating activities:
Depreciation and amortization	11,371	7,834
Amortization of debt issuance costs	1,334	1,110
Equity-based compensation expense	4,170	2,413
Deferred income tax expense	9,097	5,392
(Income) loss from discontinued operations, net of taxes	(31)	390
Debt extinguishment costs	0	9,350
Gain on foreign currency derivatives	(13,735)	0
Other	25	14
Change in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable, net	(15,303)	(10,557)
Other current assets	(4,792)	107
Other assets	(578)	(807)
Accounts payable and other accrued liabilities	(1,300)	1,038
Accrued salaries and benefits	1,782	(3,074)
Other liabilities	1,701	458
Net cash (used in) provided by continuing operating activities	29,250	29,603
Net cash used in discontinued operating activities	(11)	(358)
Net cash (used in) provided by operating activities	29,239	29,245
Investing activities:
Cash paid for acquisitions, net of cash acquired	(10,000)	(121,731)
Cash paid for capital expenditures	(43,323)	(29,709)
Cash paid for real estate acquisitions	(18,326)	(3,959)
Other	(439)	(554)
Net cash (used in) provided by investing activities	(72,088)	(155,953)
Financing activities:
Borrowings on long-term debt	7,500	150,000
Borrowings on revolving credit facility	59,500	8,000
Principal payments on revolving credit facility	(113,000)	(8,000)
Principal payments on long-term debt	(3,750)	(1,875)
Repayment of long-term debt		(52,500)
Payment of debt issuance costs	(5,810)	(4,307)
Payment of premium on note redemption	0	(6,759)
Issuance of common stock, net	374,336	0
Common stock withheld for minimum statutory taxes, net	(2,981)	(1,062)
Excess tax benefit from equity awards	3,479	1,211
Cash paid for contingent consideration	(3,250)	0
Net cash (used in) provided by financing activities	316,024	84,708
Net increase (decrease) in cash and cash equivalents	273,175	(42,000)
Cash and cash equivalents at beginning of the period	4,569	49,399
Cash and cash equivalents at end of the period	277,744	7,399
Effect of acquisitions:
Assets acquired, excluding cash	10,500	146,062
Liabilities assumed	0	(12,647)
Prior year deposits paid for acquisitions	(500)	(11,684)
Cash paid for acquisitions, net of cash acquired	$ 10,000	$ 121,731

XML

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Statement Of Financial Position [Abstract]
Receivable, allowance for doubtful accounts	$ 19,894	$ 18,345
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, authorized	10,000,000	10,000,000
Preferred stock, issued	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	90,000,000	90,000,000
Common stock, shares issued	59,161,654	50,070,980
Common stock, shares outstanding	59,161,654	50,070,980

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Income Taxes

6 Months Ended

Jun. 30, 2014

Income Tax Disclosure [Abstract]

Income Taxes

10. Income Taxes

The provision for income taxes for continuing operations for the three months ended June 30, 2014 and 2013 reflects effective tax rates of 39.9% and 39.5%, respectively. The increase in the tax rate for the three months ended June 30, 2014 was primarily attributable to non-deductible transaction-related expenses associated with acquisition of PiC on July 1, 2014. The provision for income taxes for continuing operations for the six months ended June 30, 2014 and 2013 reflects effective tax rates of 39.0% and 39.6%, respectively. The decrease in the tax rate for the six months ended June 30, 2014 was primarily attributable to various state tax planning initiatives and restructurings partially offset by non-deductible transaction-related expenses associated with acquisition of PiC on July 1, 2014.

XML

Document and Entity Information	6 Months Ended
	Jun. 30, 2014	Jul. 30, 2014
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q2
Entity Registrant Name	Acadia Healthcare Company, Inc.
Entity Central Index Key	0001520697
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		59,815,482

XML

Derivatives

6 Months Ended

Jun. 30, 2014

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Derivatives

11. Derivatives

The Company entered into two foreign currency forward contracts in June 2014 in connection with the PiC acquisition. The foreign currency forward contracts limited the economic risk of changes in the foreign exchange rate between US Dollars (“USD”) and British Pounds (“GBP”) associated with the payment of the purchase price in GBP on July 1, 2014. These foreign currency forward contracts did not meet the hedge accounting criteria under Accounting Standards Codification 815, Derivatives and Hedging. As such, changes in fair value have been recorded within earnings in the current period. As of June 30, 2014, a receivable for the fair value of the financial instruments of $13.7 million is included in other current assets. The final fair value of the foreign currency forward contracts, settled on July 1, 2014, was $15.3 million.

XML

Condensed Consolidated Statements of Operations (Unaudited) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Income Statement [Abstract]
Revenue before provision for doubtful accounts	$ 220,664	$ 182,951	$ 426,783	$ 348,656
Provision for doubtful accounts	(6,861)	(5,457)	(11,562)	(9,949)
Revenue	213,803	177,494	415,221	338,707
Salaries, wages and benefits (including equity-based compensation expense of $2,406, $1,812, $4,170 and $2,413, respectively)	122,473	100,764	240,048	195,115
Professional fees	10,891	9,324	21,273	18,338
Supplies	10,596	9,613	20,660	18,211
Rents and leases	2,889	2,394	5,658	4,721
Other operating expenses	24,646	20,096	47,756	37,079
Depreciation and amortization	5,935	4,212	11,371	7,834
Interest expense, net	9,730	9,445	19,437	18,207
Debt extinguishment costs	0	0	0	9,350
Gain on foreign currency derivatives	(13,735)	0	(13,735)	0
Transaction-related expenses	3,016	1,355	4,595	2,829
Total expenses	176,441	157,203	357,063	311,684
Income from continuing operations before income taxes	37,362	20,291	58,158	27,023
Provision for income taxes	14,905	8,020	22,680	10,698
Income (loss) from continuing operations	22,457	12,271	35,478	16,325
(Loss) income from discontinued operations, net of income taxes	(6)	(74)	31	(390)
Net income	$ 22,451	$ 12,197	$ 35,509	$ 15,935
Basic earnings per share:
Income from continuing operations	$ 0.43	$ 0.24	$ 0.70	$ 0.33
(Loss) income from discontinued operations				$ (0.01)
Net income	$ 0.43	$ 0.24	$ 0.70	$ 0.32
Diluted earnings per share:
Income from continuing operations	$ 0.43	$ 0.24	$ 0.69	$ 0.33
(Loss) income from discontinued operations				$ (0.01)
Net income	$ 0.43	$ 0.24	$ 0.69	$ 0.32
Weighted-average shares outstanding:
Basic	51,616	50,009	50,872	49,961
Diluted	51,819	50,282	51,174	50,196

XML

Property and Equipment

6 Months Ended

Jun. 30, 2014

Property Plant And Equipment [Abstract]

Property and Equipment

5. Property and Equipment

Property and equipment consists of the following as of June 30, 2014 and December 31, 2013 (in thousands):

	June 30, 2014			December 31, 2013
Land	$	66,955		$	58,947
Building and improvements		306,219			259,523
Equipment		43,020			36,742
Construction in progress		43,450			44,186
		459,644			399,398
Less accumulated depreciation		(40,258	)		(29,289	)
Property and equipment, net	$	419,386		$	370,109

XML

Goodwill and Other Intangible Assets

6 Months Ended

Jun. 30, 2014

Goodwill And Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets

4. Goodwill and Other Intangible Assets

The following table summarizes changes in goodwill during the three months ended June 30, 2014 (in thousands):

Balance at January 1, 2014	$	661,549
Increase from 2014 acquisitions		3,796
Other		350
Balance at June 30, 2014	$	665,695

Other identifiable intangible assets and related accumulated amortization consisted of the following as of June 30, 2014 and December 31, 2013 (in thousands):

	Gross Carrying Amount				Accumulated Amortization
	June 30, 2014		December 31, 2013		June 30, 2014			December 31, 2013
Intangible assets subject to amortization:
Contract intangible assets	$	2,100	$	2,100	$	(1,120	)	$	(910	)
Non-compete agreements		1,247		1,247		(1,088	)		(1,021	)
		3,347		3,347		(2,208	)		(1,931	)
Intangible assets not subject to amortization:
Licenses and accreditations		8,595		8,391		—			—
Trade names		3,000		3,000		—			—
Certificates of need		8,118		7,761		—			—
		19,713		19,152		—			—
Total	$	23,060	$	22,499	$	(2,208	)	$	(1,931	)

In connection with the Pacific Grove acquisition, the Company acquired a license and accreditation intangible asset with a fair value of $0.2 million.

In connection with the Greenleaf acquisition, the Company acquired a certificate of need with a fair value of $0.6 million. In connection with the Delta acquisition, the Company acquired intangible assets with a fair value of $0.8 million consisting of licenses and accreditations of $0.2 million and a certificate of need of $0.6 million. In connection with the UMC Facilities’ acquisition, the Company acquired intangible assets with a fair value of $1.5 million consisting of licenses and accreditations of $0.2 million and certificates of need of $1.3 million. In connection with the Longleaf acquisition, the Company acquired a license and accreditation intangible asset with a fair value of $0.2 million. In connection with the Cascade acquisition, the Company acquired a certificate of need with a fair value of $0.3 million. The Company incurred and capitalized $0.4 million and $0.3 million during the six months ended June 30, 2014 and 2013, respectively, related to costs to obtain certificates of need.

The non-compete agreements are being amortized on a straight-line basis over the term of the agreements. The contract intangible is amortized on a straight-line basis over the estimated five-year term of the related contract.

Amortization expense related to definite-lived intangible assets was $0.1 million and $0.2 million for the three months ended June 30, 2014 and 2013, respectively, and $0.3 million and $0.4 million for the six months ended June 30, 2014 and 2013, respectively. Estimated amortization expense for the years ending December 31, 2014, 2015, 2016, 2017 and 2018 is $0.5 million, $0.5 million, $0.4 million, $0 and $0, respectively. The Company’s licenses and accreditations, trade names and certificate of need intangible assets have indefinite lives and are, therefore, not subject to amortization.

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Description of Business and Basis of Presentation (Policies)

6 Months Ended

Jun. 30, 2014

Accounting Policies [Abstract]

Description of Business

Description of Business

Acadia Healthcare Company, Inc. (the “Company”) develops and operates inpatient psychiatric facilities, residential treatment centers, group homes, substance abuse facilities and facilities providing outpatient behavioral healthcare services to serve the behavioral health and recovery needs of communities throughout the United States. At June 30, 2014, the Company operated 52 behavioral healthcare facilities with over 4,400 licensed beds in 24 states and Puerto Rico. On July 1, 2014, the Company completed its acquisition of Partnerships in Care (“PiC”), which is the second largest independent provider of inpatient behavioral healthcare services in the United Kingdom, operating 23 inpatient behavioral healthcare facilities with over 1,200 beds.

Basis of Presentation

Basis of Presentation

The business of the Company is conducted through limited liability companies and C-corporations, each of which is a direct or indirect wholly-owned subsidiary of the Company. The Company’s consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, all of which are 100% owned. All intercompany accounts and transactions have been eliminated in consolidation.

The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation of our financial position and results of operations have been included. The Company’s fiscal year ends on December 31 and interim results are not necessarily indicative of results for a full year or any other interim period. The condensed consolidated balance sheet at December 31, 2013 has been derived from the audited financial statements as of that date. The information contained in these condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto for the fiscal year ended December 31, 2013 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 21, 2014. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Certain reclassifications have been made to prior years to conform to the current year presentation.

Recently Issued Accounting Standards

In April 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-08, “Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity” (“ASU 2014-08”). ASU 2014-08 raises the threshold for a disposal to qualify as a discontinued operation and requires new disclosures of both discontinued operations and certain other disposals that do not meet the definition of a discontinued operation. ASU 2014-08 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2014. Early adoption is permitted. Management is evaluating the impact of ASU 2014-08 on the Company’s consolidated financial statements and does not expect ASU 2014-08 to have a significant impact on the Company’s consolidated financial statements.

In May 2014, the FASB and the International Accounting Standards Board issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). ASU 2014-09’s core principal is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. ASU 2014-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. Early adoption is not permitted. Management is evaluating the impact of ASU 2014-09 on the Company’s consolidated financial statements and does not expect ASU 2014-09 to have a significant impact on the Company’s consolidated financial statements.

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Fair Value Measurements

6 Months Ended

Jun. 30, 2014

Fair Value Disclosures [Abstract]

Fair Value Measurements

12. Fair Value Measurements

The carrying amounts reported for cash and cash equivalents, accounts receivable, other current assets, accounts payable and other current liabilities approximate fair value because of the short-term maturity of these instruments.

The carrying amounts and fair values of the Company’s Amended and Restated Senior Credit Facility, 12.875% Senior Notes, 6.125% Senior Notes, 9.0% and 9.5% Revenue Bonds, contingent consideration liability and foreign currency derivatives as of June 30, 2014 and December 31, 2013 were as follows (in thousands):

	Carrying Amount				Fair Value
	June 30, 2014		December 31, 2013		June 30, 2014		December 31, 2013
Amended and Restated Senior Credit Facility	$	296,250	$	346,000	$	296,250	$	346,000
12.875% Senior Notes due 2018	$	96,314	$	96,216	$	115,050	$	118,706
6.125% Senior Notes due 2021	$	150,000	$	150,000	$	157,125	$	155,625
9.0% and 9.5% Revenue Bonds	$	24,693	$	24,920	$	24,693	$	24,920
Contingent consideration liability	$	3,750	$	6,500	$	3,750	$	6,500
Foreign currency forward contracts	$	13,735		—	$	13,735		—

The Company’s Amended and Restated Senior Credit Facility, 12.875% Senior Notes, 6.125% Senior Notes and 9.0% and 9.5% Revenue Bonds were categorized as Level 2 in the GAAP fair value hierarchy. Fair values were based on trading activity among the Company’s lenders and the average bid and ask price as determined using published rates.

The fair value of the contingent consideration liability at June 30, 2014 was categorized as Level 3 in the GAAP fair value hierarchy. The contingent consideration liability was valued using a probability-weighted discounted cash flow method. This analysis reflected the contractual terms of the purchase agreements and utilized assumptions with regard to future earnings, probabilities of achieving such future earnings and a discount rate. Significant increases with respect to assumptions as to future earnings and probabilities of achieving such future earnings would result in higher fair value measurement while an increase in the discount rate would result in a lower fair value measurement. During the six months ended June 30, 2014, the Company changed its projections of the timing of future payments. This change resulted in a $0.5 million increase in the fair value of the contingent consideration liability, which was recorded in transaction-related expenses in the consolidated statements of operations. During the three months ended June 30, 2014, the Company paid $3.3 million of the estimated $7.0 million contingent consideration liability due to Park Royal achieving certain earnings targets.

The fair value of the foreign currency forward contracts at June 30, 2014 was categorized as Level 2 in the GAAP fair value hierarchy. The foreign currency forward contracts’ fair market value was calculated using the published foreign exchange rate between the USD and GBP as of June 30, 2014 compared to the exchange rate at the dates of the contracts.

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Equity

6 Months Ended

Jun. 30, 2014

Equity [Abstract]

Equity

8. Equity

Preferred Stock

The Company’s amended and restated certificate of incorporation provides that up to 10,000,000 shares of preferred stock may be issued. The Board of Directors has the authority to issue preferred stock in one or more series and to fix for each series the voting powers (full, limited or none), and the designations, preferences and relative participating, optional or other special rights and qualifications, limitations or restrictions on the stock and the number of shares constituting any series and the designations of this series, without any further vote or action by the stockholders.

Common Stock

The Company’s amended and restated certificate of incorporation provides that up to 90,000,000 shares of common stock may be issued. Holders of the Company’s common stock are entitled to one vote for each share held of record on all matters on which stockholders may vote. There are no preemptive, conversion, redemption or sinking fund provisions applicable to shares of the Company’s common stock. In the event of liquidation, dissolution or winding up, holders of the Company’s common stock are entitled to share ratably in the assets available for distribution, subject to any prior rights of any holders of preferred stock then outstanding. Delaware law prohibits the Company from paying any dividends unless it has capital surplus or net profits available for this purpose. In addition, the Amended and Restated Senior Credit Facility imposes restrictions on the Company’s ability to pay dividends.

Equity Offering

On June 17, 2014, the Company completed the offering of 8,881,794 shares of common stock (including shares sold pursuant to the exercise of the over-allotment option that the Company granted to the underwriters as part of the offering) at a price of $44.00 per share. The net proceeds to the Company from the sale of the shares, after deducting the underwriting discount of $15.6 million and additional offering-related expenses of $0.8 million, were $374.3 million. The Company used the net offering proceeds to partially fund the purchase price for the acquisition of PiC on July 1, 2014.

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Financial Information for the Company and Its Subsidiaries - Additional Information (Detail)	Jun. 30, 2014	Mar. 12, 2013	Nov. 01, 2011
12.875% Senior Notes Due 2018 [Member]
Line of Credit Facility [Line Items]
Percentage of senior notes that are jointly and severally guaranteed on an unsecured senior basis	12.875%	12.875%	12.875%
6.125% Senior Notes Due 2021 [Member]
Line of Credit Facility [Line Items]
Percentage of senior notes that are jointly and severally guaranteed on an unsecured senior basis	6.125%	6.125%

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Discontinued Operations

6 Months Ended

Jun. 30, 2014

Discontinued Operations And Disposal Groups [Abstract]

Discontinued Operations

6. Discontinued Operations

In June 2012, the Company disposed of its PsychSolutions facility located in Miami, Florida and recognized a pretax loss on disposal of $0.2 million, which had been included in income (loss) from discontinued operations on the consolidated statements of operations. The results of operations of this facility has been reported as discontinued operations in the accompanying consolidated financial statements.

A summary of results from discontinued operations is as follows (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014		2013
Revenue	$	—		$	—		$	—	$	—
(Loss) income from discontinued operations, net of income taxes	$	(6	)	$	(74	)	$	31	$	(390	)

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Long-Term Debt

6 Months Ended

Jun. 30, 2014

Debt Disclosure [Abstract]

Long-Term Debt

7. Long-Term Debt

Long-term debt consisted of the following (in thousands):

	June 30, 2014			December 31, 2013
Amended and Restated Senior Credit Facility:
Senior Secured Term Loans	$	296,250		$	292,500
Senior Secured Revolving Line of Credit		—			53,500
12.875% Senior Notes due 2018		96,314			96,216
6.125% Senior Notes due 2021		150,000			150,000
9.0% and 9.5% Revenue Bonds		24,693			24,920
		567,257			617,136
Less: current portion		(11,445	)		(15,195	)
Long-term debt	$	555,812		$	601,941

Amended and Restated Senior Credit Facility

The Company entered into a senior secured credit facility (the “Senior Secured Credit Facility”), administered by Bank of America, N.A., on April 1, 2011. On December 31, 2012, the Company entered into an Amended and Restated Credit Agreement (the “Amended and Restated Credit Agreement”) which amended and restated the Senior Secured Credit Facility (“Amended and Restated Senior Credit Facility”).

On February 13, 2014, the Company entered into a Fourth Amendment (the “Fourth Amendment”) to the Amended and Restated Credit Agreement, to increase the size of the Amended and Restated Senior Credit Facility and extend the maturity date thereof, which resulted in the Company having a revolving line of credit of up to $300.0 million and term loans of $300.0 million. The Fourth Amendment also reduced the interest rates applicable to the Amended and Restated Senior Credit Facility and provided increased flexibility to the Company in terms of the financial and other restrictive covenants. The Fourth Amendment also provides for a $150.0 million incremental credit facility, with the potential for unlimited additional incremental amounts, provided the Company meets certain financial ratios, in each case subject to customary conditions precedent to borrowing.

On June 16, 2014, the Company entered into a Fifth Amendment (the “Fifth Amendment”) to the Amended and Restated Credit Agreement. The Fifth Amendment specifically permitted the Company’s acquisition of PiC, gave the Company the ability to incur a tranche of term loan B debt in the future through its incremental credit facility, and modified certain of the restrictive covenants on miscellaneous investments and incurrence of miscellaneous liens. The restrictive covenants on investments in joint ventures and foreign subsidiaries were also amended such that the Company may now invest, in any given fiscal year, up to five percent (5%) of its total assets in both joint ventures and foreign subsidiaries, respectively; provided that the aggregate amount of investments in both joint ventures and foreign subsidiaries, respectively, may not exceed ten percent (10%) of its total assets over the life of the Amended and Restated Senior Credit Facility; provided further that the aggregate amount of investments made in both joint ventures and foreign subsidiaries collectively pursuant to the foregoing may not exceed fifteen percent (15%) of its total assets. Finally, the Fifth Amendment provided increased flexibility to the Company in terms of its financial covenants.

The Company had $299.6 million of availability under the revolving line of credit as of June 30, 2014, of which $125.0 million was borrowed on July 1, 2014 in connection with the PiC acquisition. Borrowings under the revolving line of credit are subject to customary conditions precedent to borrowing. The term loans require quarterly principal payments of $1.9 million for June 30, 2014 to December 31, 2014, $3.8 million for March 31, 2015 to December 31, 2015, $5.6 million for March 31, 2016 to December 31, 2016, $7.5 million for March 31, 2017 to December 31, 2017, and $9.4 million for March 31, 2018 to December 31, 2018, with the remaining principal balance due on the maturity date of February 13, 2019.

Borrowings under the Amended and Restated Senior Credit Facility are guaranteed by each of the Company’s wholly-owned domestic subsidiaries (other than Park Royal and certain other excluded subsidiaries) and are secured by a lien on substantially all of the assets of the Company and such subsidiaries. Borrowings under the Amended and Restated Senior Credit Facility bear interest at a rate tied to Acadia’s Consolidated Leverage Ratio (defined as consolidated funded debt net of up to $20,000,000 of unrestricted and unencumbered cash to consolidated EBITDA, in each case as defined in the Amended and Restated Credit Agreement). The Applicable Rate (as defined in the Amended and Restated Credit Agreement) for borrowings under the Amended and Restated Senior Credit Facility was 2.75% for Eurodollar Rate Loans (as defined in the Amended and Restated Credit Agreement) and 1.75% for Base Rate Loans (as defined in the Amended and Restated Credit Agreement) at June 30, 2014. Eurodollar Rate Loans bear interest at the Applicable Rate plus the Eurodollar Rate (as defined in the Amended and Restated Credit Agreement) (based upon the LIBOR Rate (as defined in the Amended and Restated Credit Agreement) prior to commencement of the interest rate period). Base Rate Loans bear interest at the Applicable Rate plus the highest of (i) the federal funds rate plus 0.50%, (ii) the prime rate and (iii) the Eurodollar Rate plus 1.0%. As of June 30, 2014, borrowings under the Senior Secured Credit Facility bore interest at a rate of LIBOR plus 2.75%. In addition, we are required to pay a commitment fee on undrawn amounts under the revolving line of credit. We paid a commitment fee of 0.50% for undrawn amounts for the period from January 1, 2013 through February 12, 2014 and 0.40% for undrawn amounts for the period from February 13, 2014 through June 30, 2014. The Amended and Restated Senior Credit Facility matures on February 13, 2019.

The Amended and Restated Credit Agreement requires the Company and its subsidiaries to comply with customary affirmative, negative and financial covenants, including a fixed charge coverage ratio, consolidated leverage ratio and senior secured leverage ratio. The Company may be required to pay all of its indebtedness immediately if it defaults on any of the numerous financial or other restrictive covenants contained in any of its material debt agreements. As of June 30, 2014, the Company was in compliance with such covenants.

12.875% Senior Notes due 2018

On November 1, 2011, the Company issued $150.0 million of 12.875% Senior Notes due 2018 (the “12.875% Senior Notes”) at 98.323% of the aggregate principal amount of $150.0 million, a discount of $2.5 million. The notes bear interest at a rate of 12.875% per annum. The Company pays interest on the notes semi-annually, in arrears, on November 1 and May 1 of each year.

The indenture governing the 12.875% Senior Notes contains covenants that, among other things, limit the Company’s ability and the ability of its restricted subsidiaries to: (i) pay dividends, redeem stock or make other distributions or investments; (ii) incur additional debt or issue certain preferred stock; (iii) transfer or sell assets; (iv) engage in certain transactions with affiliates; (v) create restrictions on dividends or other payments by the restricted subsidiaries; (vi) merge, consolidate or sell substantially all of the Company’s assets; and (vii) create liens on assets.

The 12.875% Senior Notes issued by the Company are guaranteed by each of the Company’s subsidiaries that guarantee the Company’s obligations under the Amended and Restated Senior Credit Facility. The guarantees are full and unconditional and joint and several.

On March 12, 2013, the Company redeemed $52.5 million in principal amount of the 12.875% Senior Notes using a portion of the net proceeds of its December 2012 equity offering pursuant to the provision in the indenture permitting an optional redemption with equity proceeds of up to 35% of the principal amount of 12.875% Senior Notes. The 12.875% Senior Notes were redeemed at a redemption price of 112.875% of the principal amount thereof plus accrued and unpaid interest to, but not including, the redemption date in accordance with the provisions of the indenture governing the 12.875% Senior Notes. As part of the redemption of 35% of the 12.875% Senior Notes, the Company recorded a debt extinguishment charge of $9.4 million, including the premium and write-off of deferred financing costs, which was recorded in debt extinguishment costs in the consolidated statements of operations.

6.125% Senior Notes due 2021

On March 12, 2013, the Company issued $150.0 million of 6.125% Senior Notes due 2021 (the “6.125% Senior Notes”). The 6.125% Senior Notes mature on March 15, 2021 and bear interest at a rate of 6.125% per annum, payable semi-annually in arrears on March 15 and September 15 of each year.

The indenture governing the 6.125% Senior Notes contains covenants that, among other things, limit the Company’s ability and the ability of its restricted subsidiaries to: (i) pay dividends, redeem stock or make other distributions or investments; (ii) incur additional debt or issue certain preferred stock; (iii) transfer or sell assets; (iv) engage in certain transactions with affiliates; (v) create restrictions on dividends or other payments by the restricted subsidiaries; (vi) merge, consolidate or sell substantially all of the Company’s assets; and (vii) create liens on assets.

The 6.125% Senior Notes issued by the Company are guaranteed by each of the Company’s subsidiaries that guarantee the Company’s obligations under the Amended and Restated Credit Facility. The guarantees are full and unconditional and joint and several.

The Company may redeem the 6.125% Senior Notes at its option, in whole or part, at any time prior to March 15, 2016, at a price equal to 100% of the principal amount of the 6.125% Senior Notes redeemed, plus accrued and unpaid interest to the redemption date and plus an applicable premium. The Company may redeem the 6.125% Senior Notes, in whole or in part, on or after March 15, 2016, at the redemption prices set forth in the indenture governing the 6.125% Senior Notes plus accrued and unpaid interest to the redemption date. At any time on or before March 15, 2016, the Company may elect to redeem up to 35% of the aggregate principal amount of the 6.125% Senior Notes at a redemption price equal to 106.125% of the principal amount thereof, plus accrued and unpaid interest to the redemption date, with the net proceeds of one or more equity offerings.

5.125% Senior Notes due 2022

On July 1, 2014, the Company issued $300.0 million of 5.125% Senior Notes. The 5.125% Senior Notes mature on July 1, 2022 and bear interest at a rate of 5.125% per annum, payable semi-annually in arrears on January 1 and July 1 of each year, beginning on January 1, 2015.

The indenture governing the 5.125% Senior Notes contains covenants that limit, among other things, the Company’s ability and the ability of its restricted subsidiaries to: (i) pay dividends, redeem stock or make other distributions or investments; (ii) incur additional debt or issue certain preferred stock; (iii) transfer or sell assets; (iv) engage in certain transactions with affiliates; (v) create restrictions on dividends or other payments by the restricted subsidiaries; (vi) merge, consolidate or sell substantially all of the Company’s assets and (vii) create liens on assets.

The 5.125% Senior Notes issued by the Company are guaranteed by each of the Company’s subsidiaries that guarantee the Company’s obligations under the Amended and Restated Credit Facility. The guarantees are full and unconditional and joint and several.

The Company may redeem the 5.125% Senior Notes at its option, in whole or part, at any time prior to July 1, 2017, at a price equal to 100% of the principal amount of the 5.125% Senior Notes redeemed, plus accrued and unpaid interest to the redemption date and plus an applicable premium. The Company may redeem the 5.125% Senior Notes, in whole or in part, on or after July 1, 2017, at the redemption prices set forth in the indenture governing the 5.125% Senior Notes plus accrued and unpaid interest to the redemption date. At any time on or before July 1, 2017, the Company may elect to redeem up to 35% of the aggregate principal amount of the 5.125% Senior Notes at a redemption price equal to 105.125% of the principal amount thereof, plus accrued and unpaid interest to the redemption date, with the net proceeds of one or more equity offerings.

9.0% and 9.5% Revenue Bonds

On November 11, 2012, in connection with the acquisition of Park Royal, the Company assumed debt of $23.0 million. The fair market value of the debt assumed was $25.6 million and resulted in a debt premium balance being recorded as of the acquisition date. The debt consisted of $7.5 million and $15.5 million of Lee County (Florida) Industrial Development Authority Healthcare Facilities Revenue Bonds, Series 2010 with stated interest rates of 9.0% and 9.5% (“9.0% and 9.5% Revenue Bonds”), respectively. The 9.0% bonds in the amount of $7.5 million have a maturity date of December 1, 2030 and require yearly principal payments beginning in 2013. The 9.5% bonds in the amount of $15.5 million have a maturity date of December 1, 2040 and require yearly principal payments beginning in 2031. The principal payments establish a bond sinking fund to be held with the trustee and shall be sufficient to redeem the principal amounts of the 9.0% and 9.5% Revenue Bonds on their respective maturity dates. As of June 30, 2014 and December 31, 2013, $2.3 million was recorded within other assets on the balance sheet related to the debt service reserve fund requirements. The yearly principal payments, which establish a bond sinking fund, will increase the debt service reserve fund requirements. The bond premium amount of $2.6 million is amortized as a reduction of interest expense over the life of the revenue bonds using the effective interest method.

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Equity-Based Compensation

6 Months Ended

Jun. 30, 2014

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Equity-Based Compensation

9. Equity-Based Compensation

Equity Incentive Plans

The Company issues stock-based awards, including stock options, restricted stock and restricted stock units, to certain officers, employees and non-employee directors under the Acadia Healthcare Company, Inc. Incentive Compensation Plan (the “Equity Incentive Plan”). As of June 30, 2014, a maximum of 4,700,000 shares of the Company’s common stock were authorized for issuance as stock options, restricted stock and restricted stock units or other share-based compensation under the Equity Incentive Plan, of which 2,760,838 were available for future grant. Stock options may be granted for terms of up to ten years. The Company recognizes expense on all share-based awards on a straight-line basis over the requisite service period of the entire award. Grants to employees generally vest in annual increments of 25% each year, commencing one year after the date of grant. The exercise prices of stock options are equal to the most recent closing price of the Company’s common stock on the date of grant.

The Company recognized $2.4 million and $1.8 million in equity-based compensation expense for the three months ended June 30, 2014 and 2013, respectively, and $4.2 million and $2.4 million for the six months ended June 30, 2014 and 2013, respectively. As of June 30, 2014, there was $26.2 million of unrecognized compensation expense related to unvested options, restricted stock and restricted stock units, which is expected to be recognized over the remaining weighted average vesting period of 1.5 years.

As of June 30, 2014, there were no warrants outstanding and exercisable. The Company recognized a deferred income tax benefit of $1.0 million and $0.7 million for the three months ended June 30, 2014 and 2013, respectively, related to equity-based compensation expense. The Company recognized a deferred income tax benefit of $1.7 million and $0.9 million for the six months ended June 30, 2014 and 2013, respectively, related to equity-based compensation expense. The actual tax benefit realized from stock options exercised during the three months ended June 30, 2014 and 2013 was $0.8 million and $0.6 million, respectively. The actual tax benefit realized from stock options exercised during the six months ended June 30, 2014 was $3.5 million and $1.2 million, respectively.

Stock option activity during 2013 and 2014 was as follows (aggregate intrinsic value in thousands):

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Options outstanding at January 1, 2013		555,097		$	13.13		7.53	$	5,632
Options granted		411,800			30.55		9.30		2,059
Options exercised		(126,662	)		9.36		N/A		2,803
Options cancelled		(41,426	)		23.50		N/A		N/A
Options outstanding at December 31, 2013		798,809			21.93		8.20		10,700
Options granted		187,463			50.32		9.68		41
Options exercised		(141,338	)		13.45		N/A		4,126
Options cancelled		(40,789	)		31.37		N/A		N/A
Options outstanding at June 30, 2014		804,145			28.90		8.28		15,131
Options exercisable at December 31, 2013		133,647		$	11.15		4.81	$	3,472
Options exercisable at June 30, 2014		144,970		$	20.45		6.15	$	4,537

Restricted stock activity during 2013 and 2014 was as follows:

	Number of Shares			Weighted Average Grant-Date Fair Value
Unvested at January 1, 2013		318,063		$	15.73
Granted		290,845			31.31
Cancelled		(53,056	)		21.27
Vested		(94,155	)		15.52
Unvested at December 31, 2013		461,697		$	24.96
Granted		227,031			49.52
Cancelled		(45,994	)		32.83
Vested		(103,966	)		23.35
Unvested at June 30, 2014		538,768		$	34.92

Restricted stock unit activity during 2013 and 2014 was as follows:

	Number of Units			Weighted Average Grant-Date Fair Value
Unvested at January 1, 2013		68,628		$	16.11
Granted		72,876			29.39
Cancelled		—			—
Vested		(45,753	)		16.11
Unvested at December 31, 2013		95,751		$	23.05
Granted		108,449			50.75
Cancelled		—			—
Vested		(79,087	)		21.81
Unvested at June 30, 2014		125,113		$	38.73

The grant-date fair value of the Company’s stock options is estimated using the Black-Scholes option pricing model. The following table summarizes the grant-date fair value of options and the assumptions used to develop the fair value estimates for options granted during the six months ended June 30, 2014 and year ended December 31, 2013:

	June 30, 2014			December 31, 2013
Weighted average grant-date fair value of options	$	18.07		$	11.62
Risk-free interest rate		1.7	%		1.0	%
Expected volatility		36	%		40	%
Expected life (in years)		5.5			5.5

The Company’s estimate of expected volatility for stock options is based upon the volatility of guideline companies given the lack of sufficient historical trading experience of the Company’s common stock. The risk-free interest rate is the approximate yield on United States Treasury Strips having a life equal to the expected option life on the date of grant. The expected life is an estimate of the number of years an option will be held before it is exercised.

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Financial Information for the Company and Its Subsidiaries - Summary of Condensed Consolidating Statement of Cash Flows (Detail) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Operating activities:
Net income (loss)	$ 35,509	$ 15,935
Adjustments to reconcile net income (loss) to net cash (used in) provided by continuing operating activities:
Equity in earnings of subsidiaries	0	0
Depreciation and amortization	11,371	7,834
Amortization of debt issuance costs	1,334	1,110
Equity-based compensation expense	4,170	2,413
Deferred income tax expense	9,097	5,392
Income from discontinued operations, net of taxes	(31)	390
Gain on foreign currency derivatives	(13,735)	0
Debt extinguishment costs	0	9,350
Other	25	14
Change in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable, net	(15,303)	(10,557)
Other current assets	(4,792)	107
Other assets	(578)	(807)
Accounts payable and other accrued liabilities	(1,300)	1,038
Accrued salaries and benefits	1,782	(3,074)
Other liabilities	1,701	458
Net cash (used in) provided by continuing operating activities	29,250	29,603
Net cash (used in) provided by discontinued operating activities	(11)	(358)
Net cash (used in) provided by operating activities	29,239	29,245
Investing activities:
Cash paid for acquisitions, net of cash acquired	(10,000)	(121,731)
Cash paid for capital expenditures	(43,323)	(29,709)
Cash paid for real estate acquisitions	(18,326)	(3,959)
Other	(439)	(554)
Net cash used in investing activities	(72,088)	(155,953)
Financing activities:
Borrowings on long-term debt	7,500	150,000
Borrowings on revolving credit facility	59,500	8,000
Principal payments on revolving credit facility	(113,000)	(8,000)
Principal payments on long-term debt	(3,750)	(1,875)
Repayment of long-term debt		(52,500)
Payment of debt issuance costs	(5,810)	(4,307)
Issuance of common stock, net	374,336	0
Payment of premium on note redemption	0	(6,759)
Common stock withheld for minimum statutory taxes, net	(2,981)	(1,062)
Excess tax benefit from equity awards	3,479	1,211
Cash paid for contingent consideration	(3,250)	0
Cash (used in) provided by intercompany activity	0	0
Net cash (used in) provided by financing activities	316,024	84,708
Net (decrease) increase in cash and cash equivalents	273,175	(42,000)
Cash and cash equivalents at beginning of the period	4,569	49,399
Cash and cash equivalents at end of the period	277,744	7,399
Parent [Member]
Operating activities:
Net income (loss)	35,509	15,935
Adjustments to reconcile net income (loss) to net cash (used in) provided by continuing operating activities:
Equity in earnings of subsidiaries	(40,839)	(33,253)
Depreciation and amortization	0	0
Amortization of debt issuance costs	1,560	1,110
Equity-based compensation expense	4,170	2,413
Deferred income tax expense	5,585	108
Income from discontinued operations, net of taxes	0	0
Gain on foreign currency derivatives	(13,735)
Debt extinguishment costs		9,350
Other	0	0
Change in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable, net	0	0
Other current assets	0	0
Other assets	165	0
Accounts payable and other accrued liabilities	0	0
Accrued salaries and benefits	0	0
Other liabilities	0	0
Net cash (used in) provided by continuing operating activities	(7,585)	(4,337)
Net cash (used in) provided by discontinued operating activities	0	0
Net cash (used in) provided by operating activities	(7,585)	(4,337)
Investing activities:
Cash paid for acquisitions, net of cash acquired	0	0
Cash paid for capital expenditures	0	0
Cash paid for real estate acquisitions	0	0
Other	0	0
Net cash used in investing activities	0	0
Financing activities:
Borrowings on long-term debt	7,500	150,000
Borrowings on revolving credit facility	59,500	8,000
Principal payments on revolving credit facility	(113,000)	(8,000)
Principal payments on long-term debt	(3,750)	(1,875)
Repayment of long-term debt		(52,500)
Payment of debt issuance costs	(5,810)	(4,307)
Issuance of common stock, net	374,336
Payment of premium on note redemption		(6,759)
Common stock withheld for minimum statutory taxes, net	(2,981)	(1,062)
Excess tax benefit from equity awards	3,479	1,211
Cash paid for contingent consideration	0
Cash (used in) provided by intercompany activity	(311,689)	(80,371)
Net cash (used in) provided by financing activities	7,585	4,337
Net (decrease) increase in cash and cash equivalents	0	0
Cash and cash equivalents at beginning of the period	0	0
Cash and cash equivalents at end of the period	0	0
Combined Subsidiary Guarantors [Member]
Operating activities:
Net income (loss)	37,848	33,507
Adjustments to reconcile net income (loss) to net cash (used in) provided by continuing operating activities:
Equity in earnings of subsidiaries	0	0
Depreciation and amortization	10,666	7,307
Amortization of debt issuance costs	0	0
Equity-based compensation expense	0	0
Deferred income tax expense	3,105	5,011
Income from discontinued operations, net of taxes	(31)	390
Gain on foreign currency derivatives	0
Debt extinguishment costs		0
Other	25	14
Change in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable, net	(16,670)	(10,745)
Other current assets	(5,033)	219
Other assets	(578)	(807)
Accounts payable and other accrued liabilities	(1,584)	1,568
Accrued salaries and benefits	1,701	(3,073)
Other liabilities	1,701	871
Net cash (used in) provided by continuing operating activities	31,150	34,262
Net cash (used in) provided by discontinued operating activities	(11)	(358)
Net cash (used in) provided by operating activities	31,139	33,904
Investing activities:
Cash paid for acquisitions, net of cash acquired	(10,000)	(121,731)
Cash paid for capital expenditures	(39,782)	(29,592)
Cash paid for real estate acquisitions	(18,326)	(3,959)
Other	(439)	(554)
Net cash used in investing activities	(68,547)	(155,836)
Financing activities:
Borrowings on long-term debt	0	0
Borrowings on revolving credit facility	0	0
Principal payments on revolving credit facility	0	0
Principal payments on long-term debt	0	0
Repayment of long-term debt		0
Payment of debt issuance costs	0	0
Issuance of common stock, net	0
Payment of premium on note redemption		0
Common stock withheld for minimum statutory taxes, net	0	0
Excess tax benefit from equity awards	0	0
Cash paid for contingent consideration	(3,250)
Cash (used in) provided by intercompany activity	315,175	78,746
Net cash (used in) provided by financing activities	311,925	78,746
Net (decrease) increase in cash and cash equivalents	274,517	(43,186)
Cash and cash equivalents at beginning of the period	0	49,307
Cash and cash equivalents at end of the period	274,517	6,121
Combined Non-Guarantors [Member]
Operating activities:
Net income (loss)	2,991	(254)
Adjustments to reconcile net income (loss) to net cash (used in) provided by continuing operating activities:
Equity in earnings of subsidiaries	0	0
Depreciation and amortization	705	527
Amortization of debt issuance costs	(226)	0
Equity-based compensation expense	0	0
Deferred income tax expense	407	273
Income from discontinued operations, net of taxes	0	0
Gain on foreign currency derivatives	0
Debt extinguishment costs		0
Other	0	0
Change in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable, net	1,367	188
Other current assets	241	(112)
Other assets	0	0
Accounts payable and other accrued liabilities	284	(530)
Accrued salaries and benefits	81	(1)
Other liabilities	0	(413)
Net cash (used in) provided by continuing operating activities	5,850	(322)
Net cash (used in) provided by discontinued operating activities	0	0
Net cash (used in) provided by operating activities	5,850	(322)
Investing activities:
Cash paid for acquisitions, net of cash acquired	0	0
Cash paid for capital expenditures	(3,541)	(117)
Cash paid for real estate acquisitions	0	0
Other	0	0
Net cash used in investing activities	(3,541)	(117)
Financing activities:
Borrowings on long-term debt	0	0
Borrowings on revolving credit facility	0	0
Principal payments on revolving credit facility	0	0
Principal payments on long-term debt	(165)	0
Repayment of long-term debt		0
Payment of debt issuance costs	0	0
Issuance of common stock, net	0
Payment of premium on note redemption		0
Common stock withheld for minimum statutory taxes, net	0	0
Excess tax benefit from equity awards	0	0
Cash paid for contingent consideration	0
Cash (used in) provided by intercompany activity	(5,411)	1,625
Net cash (used in) provided by financing activities	(5,576)	1,625
Net (decrease) increase in cash and cash equivalents	(3,267)	1,186
Cash and cash equivalents at beginning of the period	6,494	92
Cash and cash equivalents at end of the period	3,227	1,278
Consolidating Adjustments [Member]
Operating activities:
Net income (loss)	(40,839)	(33,253)
Adjustments to reconcile net income (loss) to net cash (used in) provided by continuing operating activities:
Equity in earnings of subsidiaries	40,839	33,253
Depreciation and amortization	0	0
Amortization of debt issuance costs	0	0
Equity-based compensation expense	0	0
Deferred income tax expense	0	0
Income from discontinued operations, net of taxes	0	0
Gain on foreign currency derivatives	0
Debt extinguishment costs		0
Other	0	0
Change in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable, net	0	0
Other current assets	0	0
Other assets	(165)	0
Accounts payable and other accrued liabilities	0	0
Accrued salaries and benefits	0	0
Other liabilities	0	0
Net cash (used in) provided by continuing operating activities	(165)	0
Net cash (used in) provided by discontinued operating activities	0	0
Net cash (used in) provided by operating activities	(165)	0
Investing activities:
Cash paid for acquisitions, net of cash acquired	0	0
Cash paid for capital expenditures	0	0
Cash paid for real estate acquisitions	0	0
Other	0	0
Net cash used in investing activities	0	0
Financing activities:
Borrowings on long-term debt	0	0
Borrowings on revolving credit facility	0	0
Principal payments on revolving credit facility	0	0
Principal payments on long-term debt	165	0
Repayment of long-term debt		0
Payment of debt issuance costs	0	0
Issuance of common stock, net	0
Payment of premium on note redemption		0
Common stock withheld for minimum statutory taxes, net	0	0
Excess tax benefit from equity awards	0	0
Cash paid for contingent consideration	0
Cash (used in) provided by intercompany activity	1,925	0
Net cash (used in) provided by financing activities	2,090	0
Net (decrease) increase in cash and cash equivalents	1,925	0
Cash and cash equivalents at beginning of the period	(1,925)	0
Cash and cash equivalents at end of the period	$ 0	$ 0

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Earnings Per Share - Computation of Basic and Diluted Earnings Per Share (Detail) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Basic and diluted earnings per share:
Income from continuing operations	$ 22,457	$ 12,271	$ 35,478	$ 16,325
(Loss) income from discontinued operations	(6)	(74)	31	(390)
Net income	$ 22,451	$ 12,197	$ 35,509	$ 15,935
Denominator:
Weighted average shares outstanding for basic earnings per share	51,616	50,009	50,872	49,961
Effect of dilutive instruments	203	273	302	235
Shares used in computing diluted earnings per common share	51,819	50,282	51,174	50,196
Basic earnings per share:
Income from continuing operations	$ 0.43	$ 0.24	$ 0.70	$ 0.33
(Loss) income from discontinued operations				$ (0.01)
Net income	$ 0.43	$ 0.24	$ 0.70	$ 0.32
Diluted earnings per share:
Income from continuing operations	$ 0.43	$ 0.24	$ 0.69	$ 0.33
(Loss) income from discontinued operations				$ (0.01)
Net income	$ 0.43	$ 0.24	$ 0.69	$ 0.32

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Equity-Based Compensation - Additional Information (Detail) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Authorized common stock	4,700,000		4,700,000
Equity incentive plan available for future grant			2,760,838
Annual increments in employee grants			25.00%
Stock options, contractual term			10 years
Equity-based compensation expense	$ 2,406,000	$ 1,812,000	$ 4,170,000	$ 2,413,000
Unrecognized compensation expense related to unvested options			26,200,000
Vesting period			1 year 6 months
Warrants outstanding and exercisable	0		0
Deferred income tax benefit			9,097,000	5,392,000
Tax realized from stock options exercised	800,000	600,000	3,500,000	1,200,000
Stock Compensation Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Deferred income tax benefit	$ 1,000,000	$ 700,000	$ 1,700,000	$ 900,000

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Recently Issued Accounting Standards

6 Months Ended

Jun. 30, 2014

Accounting Changes And Error Corrections [Abstract]

Recently Issued Accounting Standards

14. Recently Issued Accounting Standards

In April 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-08, “Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity” (“ASU 2014-08”). ASU 2014-08 raises the threshold for a disposal to qualify as a discontinued operation and requires new disclosures of both discontinued operations and certain other disposals that do not meet the definition of a discontinued operation. ASU 2014-08 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2014. Early adoption is permitted. Management is evaluating the impact of ASU 2014-08 on the Company’s consolidated financial statements and does not expect ASU 2014-08 to have a significant impact on the Company’s consolidated financial statements.

In May 2014, the FASB and the International Accounting Standards Board issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). ASU 2014-09’s core principal is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. ASU 2014-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. Early adoption is not permitted. Management is evaluating the impact of ASU 2014-09 on the Company’s consolidated financial statements and does not expect ASU 2014-09 to have a significant impact on the Company’s consolidated financial statements.

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Goodwill and Other Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2014

Goodwill And Intangible Assets Disclosure [Abstract]

Summary of Changes in Goodwill

The following table summarizes changes in goodwill during the three months ended June 30, 2014 (in thousands):

Balance at January 1, 2014	$	661,549
Increase from 2014 acquisitions		3,796
Other		350
Balance at June 30, 2014	$	665,695

Other Identifiable Intangible Assets and Related Accumulated Amortization

Other identifiable intangible assets and related accumulated amortization consisted of the following as of June 30, 2014 and December 31, 2013 (in thousands):

	Gross Carrying Amount				Accumulated Amortization
	June 30, 2014		December 31, 2013		June 30, 2014			December 31, 2013
Intangible assets subject to amortization:
Contract intangible assets	$	2,100	$	2,100	$	(1,120	)	$	(910	)
Non-compete agreements		1,247		1,247		(1,088	)		(1,021	)
		3,347		3,347		(2,208	)		(1,931	)
Intangible assets not subject to amortization:
Licenses and accreditations		8,595		8,391		—			—
Trade names		3,000		3,000		—			—
Certificates of need		8,118		7,761		—			—
		19,713		19,152		—			—
Total	$	23,060	$	22,499	$	(2,208	)	$	(1,931	)

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Long-Term Debt - Additional Information (Detail) (USD $)	3 Months Ended		6 Months Ended											6 Months Ended				6 Months Ended			6 Months Ended			6 Months Ended	0 Months Ended	6 Months Ended		0 Months Ended	6 Months Ended				0 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013	Nov. 01, 2011	Jun. 30, 2014 Park Royal [Member]	Dec. 31, 2013 Park Royal [Member]	Jun. 30, 2014 9.0% and 9.5% Revenue Bonds [Member]	Dec. 31, 2013 9.0% and 9.5% Revenue Bonds [Member]	Nov. 11, 2012 9.0% and 9.5% Revenue Bonds [Member] Park Royal [Member]	Jun. 30, 2014 9.0% Revenue Bonds [Member]	Dec. 31, 2013 9.0% Revenue Bonds [Member]	Jun. 30, 2014 9.0% Revenue Bonds [Member] Park Royal [Member]	Nov. 11, 2012 9.0% Revenue Bonds [Member] Park Royal [Member]	Jun. 30, 2014 9.5% Revenue Bonds [Member]	Dec. 31, 2013 9.5% Revenue Bonds [Member]	Jun. 30, 2014 9.5% Revenue Bonds [Member] Park Royal [Member]	Nov. 11, 2012 9.5% Revenue Bonds [Member] Park Royal [Member]	Jul. 01, 2014 Subsequent Event [Member]	Jun. 30, 2014 Base Rate Loans [Member]	Feb. 13, 2014 Revolving Credit Facility [Member] Amended and Restated Credit Facility [Member]	Feb. 13, 2014 Term Loans [Member] Amended and Restated Credit Facility [Member]	Jun. 30, 2014 Eurodollar Rate Loans [Member]	Mar. 12, 2013 12.875% Senior Notes Due 2018 [Member]	Jun. 30, 2014 12.875% Senior Notes Due 2018 [Member]	Nov. 01, 2011 12.875% Senior Notes Due 2018 [Member]	Mar. 12, 2013 6.125% Senior Notes Due 2021 [Member]	Jun. 30, 2014 6.125% Senior Notes Due 2021 [Member]	Jun. 30, 2014 6.125% Senior Notes Due 2021 [Member] Prior To March 15, 2016 [Member]	Jun. 30, 2014 6.125% Senior Notes Due 2021 [Member] Prior To March Fifteen Two Thousand Sixteen Thirty Five Percent Redemption[Member]	Jun. 30, 2014 5.125% Senior Notes Due 2022 [Member]	Jul. 01, 2014 5.125% Senior Notes Due 2022 [Member] Subsequent Event [Member]	Jul. 01, 2014 5.125% Senior Notes Due 2022 [Member] Subsequent Event [Member]	Jun. 30, 2014 5.125% Senior Notes Due 2022 [Member] Prior To July One Two Thousand And Seventeen [Member]	Jun. 30, 2014 5.125% Senior Notes Due 2022 [Member] Prior To July One Two Thousand And Seventeen Thirty Five Percent Redemption [Member]	Jun. 30, 2014 Senior Secured Credit Facility [Member]	Jun. 30, 2014 Senior Secured Credit Facility [Member] January 1, 2013 through February 12, 2014 [Member]	Jun. 30, 2014 Senior Secured Credit Facility [Member] February 13, 2014 through March 31, 2014 [Member]	Jun. 30, 2014 Senior Secured Credit Facility [Member] London Interbank Offered Rate (LIBOR) [Member]	Jun. 30, 2014 June 30, 2014 to December 31, 2014 [Member]	Jun. 30, 2014 March 31, 2015 to December 31, 2015 [Member]	Jun. 30, 2014 March 31, 2016 to December 31, 2016 [Member]	Jun. 30, 2014 March 31, 2017 to December 31, 2017 [Member]	Jun. 30, 2014 March 31, 2018 to December 31, 2018 [Member]	Jun. 30, 2014 Amended and Restated Senior Credit Facility [Member]
Debt Instrument [Line Items]
Senior secured credit facility initiation date																																					Apr. 01, 2011
Amount under revolving line of credit																						$ 300,000,000	$ 300,000,000
Increase in credit facility			150,000,000
Restrictive covenants on investments, Description			the Company may now invest, in any given fiscal year, up to five percent (5%) of its total assets in both joint ventures and foreign subsidiaries, respectively; provided that the aggregate amount of investments in both joint ventures and foreign subsidiaries, respectively, may not exceed ten percent (10%) of its total assets over the life of the Amended and Restated Senior Credit Facility; provided further that the aggregate amount of investments made in both joint ventures and foreign subsidiaries collectively pursuant to the foregoing may not exceed fifteen percent (15%) of its total assets
Amount available under revolving line of credit	299,600,000		299,600,000																	125,000,000
Term loan principal payments																																									1,900,000	3,800,000	5,600,000	7,500,000	9,400,000
Debt instrument maturity date														Dec. 01, 2030				Dec. 01, 2040										Mar. 15, 2021					Jul. 01, 2022				Feb. 13, 2019									Feb. 13, 2019
Interest on borrowings																					1.75%			2.75%																2.75%
Debt Instrument, Debt Default, Amount	20,000,000		20,000,000
Basis spread on variable rate																					0.50%			1.00%
Interest on undrawn loans																																						0.50%	0.40%
Debt instrument amount															7,500,000				15,500,000								150,000,000	150,000,000						300,000,000
Issue rate of senior notes																											98.323%
Discount value on principal amount																											2,500,000
Debt instrument interest rate												9.00%	9.00%		9.00%	9.50%	9.50%		9.50%						12.875%	12.875%	12.875%	6.125%	6.125%					5.125%
Interest on the notes																										Semi-annually, in arrears, on November 1 and May 1 of each year			Payable semi-annually in arrears on March 15 and September 15 of each year.			Payable semi-annually in arrears on January 1 and July 1 of each year, beginning on January 1, 2015.
Aggregate senior note principal amount	567,257,000		567,257,000		617,136,000	150,000,000			24,693,000	24,920,000
Debt instrument, maximum redemption amount																									52,500,000
Debt instrument, redemption price percentage																									112.875%					100.00%	106.125%				100.00%	105.125%
Redemption percentage of senior notes																									35.00%				35.00%			35.00%
Debt extinguishment charge	0	0	0	(9,350,000)																					9,400,000
Senior notes terms																													The Company may redeem the 6.125% Senior Notes at its option, in whole or part, at any time prior to March 15, 2016, at a price equal to 100% of the principal amount of the 6.125% Senior Notes redeemed, plus accrued and unpaid interest to the redemption date and plus an applicable premium. The Company may redeem the 6.125% Senior Notes, in whole or in part, on or after March 15, 2016, at the redemption prices set forth in the indenture governing the 6.125% Senior Notes plus accrued and unpaid interest to the redemption date. At any time on or before March 15, 2016, the Company may elect to redeem up to 35% of the aggregate principal amount of the 6.125% Senior Notes at a redemption price equal to 106.125% of the principal amount thereof, plus accrued and unpaid interest to the redemption date, with the net proceeds of one or more equity offerings.			The Company may redeem the 5.125% Senior Notes at its option, in whole or part, at any time prior to July 1, 2017, at a price equal to 100% of the principal amount of the 5.125% Senior Notes redeemed, plus accrued and unpaid interest to the redemption date and plus an applicable premium. The Company may redeem the 5.125% Senior Notes, in whole or in part, on or after July 1, 2017, at the redemption prices set forth in the indenture governing the 5.125% Senior Notes plus accrued and unpaid interest to the redemption date. At any time on or before July 1, 2017, the Company may elect to redeem up to 35% of the aggregate principal amount of the 5.125% Senior Notes at a redemption price equal to 105.125% of the principal amount thereof, plus accrued and unpaid interest to the redemption date, with the net proceeds of one or more equity offerings.
Assumed debt on acquisition											23,000,000				7,500,000				15,500,000
Fair market value of the debt assumed											25,600,000
Debt service reserve fund within other assets							2,300,000	2,300,000
Debt instrument premium											$ 2,600,000

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Goodwill and Other Intangible Assets - Summary of Changes in Goodwill (Detail) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2014
Goodwill And Intangible Assets Disclosure [Abstract]
Beginning Balance	$ 661,549
Increase from 2014 acquisitions	3,796
Other	350
Ending Balance	$ 665,695

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Condensed Consolidated Statements of Operations (Unaudited) (Parenthetical) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Income Statement [Abstract]
Equity-based compensation expense	$ 2,406	$ 1,812	$ 4,170	$ 2,413

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Acquisitions

6 Months Ended

Jun. 30, 2014

Business Combinations [Abstract]

Acquisitions

3. Acquisitions

Pacific Grove

On January 1, 2014, the Company completed its acquisition of the assets of Pacific Grove Hospital (“Pacific Grove”), an inpatient psychiatric facility with 68 licensed beds located in Riverside, California, for cash consideration of $10.5 million.

2013 Acquisitions

On December 1, 2013, the Company completed its acquisition of the assets of Cascade Behavioral Hospital (“Cascade”). On October 1, 2013, the Company completed its acquisition of the assets of Longleaf Hospital (“Longleaf”). On August 1, 2013, the Company completed its acquisition of The Refuge, a Healing Place (“The Refuge”). On May 1, 2013, the Company completed its acquisition of two facilities from United Medical Corporation (the “UMC Facilities”). On January 31, 2013, the Company completed its acquisition of DMC-Memphis, Inc. d/b/a Delta Medical Center (“Delta”). On January 1, 2013, the Company completed its acquisition of the assets of Greenleaf Center (“Greenleaf”).

Summary of Acquisitions

The Company selectively seeks opportunities to expand and diversify its base of operations by acquiring additional facilities. The majority of the goodwill associated with the acquisitions completed in 2014 and 2013 is deductible for federal income tax purposes. The fair values assigned to certain assets and liabilities assumed by the Company have been estimated on a preliminary basis and are subject to change as new facts and circumstances emerge that were present at the date of acquisition. Specifically, the Company is further assessing the valuation of certain tax matters as well as certain receivables and assumed liabilities of Pacific Grove, Cascade, Longleaf and The Refuge. The Company expects to finalize its analyses as the necessary information becomes available to complete the measurement process. Once finalized, the Company will adjust the application of the acquisition method of accounting to reflect its final valuations.

The preliminary fair values of assets acquired during the six months ended June 30, 2014 in connection with the Pacific Grove acquisition were as follows (in thousands):

Property and equipment	$	6,500
Goodwill		3,796
Intangible assets		204
Total assets acquired		10,500
Total liabilities assumed		—
Net assets acquired	$	10,500

The fair values of assets acquired and liabilities assumed during 2013, at the corresponding acquisition dates, were as follows (in thousands):

	UMC Facilities		Other		Total
Cash	$	52	$	873	$	925
Accounts receivable		4,961		5,868		10,829
Prepaid expenses and other current assets		721		3,067		3,788
Property and equipment		22,347		42,672		65,019
Goodwill		67,559		37,586		105,145
Intangible assets		1,505		1,910		3,415
Other assets		4,712		29		4,741
Total assets acquired		101,857		92,005		193,862
Accounts payable		1,535		7,487		9,022
Accrued salaries and benefits		588		3,079		3,667
Other accrued expenses		315		2,289		2,604
Other liabilities		—		2,360		2,360
Total liabilities assumed		2,438		15,215		17,653
Net assets acquired	$	99,419	$	76,790	$	176,209

Other

The qualitative factors comprising the goodwill acquired through June 30, 2104 in the Pacific Grove, Cascade, Longleaf, The Refuge, the UMC Facilities, Delta and Greenleaf acquisitions (collectively the “2013 and 2014 Acquisitions”) include efficiencies derived through synergies expected by the elimination of certain redundant corporate functions and expenses, the ability to leverage call center referrals to a broader provider base, coordination of services provided across the combined network of facilities, achievement of operating efficiencies by benchmarking performance, and applying best practices throughout the combined companies.

Transaction-related expenses comprised the following costs for the three and six months ended June 30, 2014 and 2013 (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
Legal, accounting and other costs	$	3,016	$	798	$	4,136	$	1,803
Severance and contract termination costs		—		557		459		1,026
	$	3,016	$	1,355	$	4,595	$	2,829

Partnerships in Care Acquisition

On July 1, 2014, the Company completed its acquisition of PiC for net cash consideration of $662.0 million, which is net of cash acquired of $12.0 million and the gain on settlement of the foreign currency derivatives of $15.3 million. The Company used $300.0 million of proceeds from the July 1, 2014 sale of 5.125% Senior Notes due 2022 (the “5.125% Senior Notes”) (described in Note 7), $374.3 million of proceeds from the June 2014 sale of Acadia common stock (described in Note 8) and borrowings under the Company’s Amended and Restated Senior Secured Credit Facility to fund the acquisition. PiC is the second largest independent provider of inpatient behavioral healthcare services in the United Kingdom, operating 23 inpatient behavioral healthcare facilities with over 1,200 beds.

The preliminary fair values of assets acquired and liabilities assumed in connection with the PiC acquisition are estimated as follows (in thousands). As the acquisition was recently completed on July 1, 2014, these amounts have been estimated on a preliminary basis from historical financial information and are subject to change as acquisition accounting is finalized.

	PiC Acquisition
Cash	$	12,000
Accounts receivable		7,300
Prepaid expenses and other current assets		5,000
Property and equipment		610,000
Goodwill		98,000
Intangible assets		3,000
Total assets acquired		735,300
Accounts payable		6,000
Accrued salaries and benefits		6,000
Other accrued expenses		8,000
Deferred tax liabilities – noncurrent		20,000
Other liabilities		6,000
Total liabilities assumed		46,000
Net assets acquired	$	689,300

Pro Forma Information

The condensed consolidated statements of operations for the three and six months ended June 30, 2014 include revenue of $34.2 million and $67.7 million, respectively, and income from continuing operations before income taxes of $2.5 million and $4.7 million, respectively, related to acquisitions completed in 2014 (through June 30, 2014) and 2013. The condensed consolidated statements of operations for the three and six months ended June 30, 2013 include revenue of $18.2 million and $28.1 million, respectively, and loss from continuing operations before income taxes of $0.9 million and $2.3 million, respectively, related to acquisitions completed in 2013.

The following table provides certain pro forma financial information for the Company as if the 2013 and 2014 Acquisitions and the acquisition of PiC on July 1, 2014 had occurred as of January 1, 2013 (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
Revenue	$	286,675	$	254,408	$	557,568	$	500,496
Income from continuing operations, before income taxes	$	23,616	$	9,924	$	30,471	$	6,913

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Fair Value Measurements - Carrying Amounts and Fair Values of Company's Amended and Restated Senior Credit Facilities and Contingent Consideration Liability (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013	Nov. 01, 2011
Disclosures Regarding Financial Instruments [Line Items]
Senior credit facility, carrying amount	$ 567,257	$ 617,136	$ 150,000
Business acquisition contingent consideration, carrying amount	3,750	6,500
Business acquisition contingent consideration, at fair value	3,750	6,500
Foreign currency forward contracts, Carrying amount	13,735
Foreign currency forward contracts, fair value	13,735
Amended and Restated Senior Credit Facility [Member]
Disclosures Regarding Financial Instruments [Line Items]
Senior credit facility, carrying amount	296,250	346,000
Senior credit facility, fair value	296,250	346,000
12.875% Senior Notes Due 2018 [Member]
Disclosures Regarding Financial Instruments [Line Items]
Senior credit facility, carrying amount	96,314	96,216
Senior credit facility, fair value	115,050	118,706
6.125% Senior Notes Due 2021 [Member]
Disclosures Regarding Financial Instruments [Line Items]
Senior credit facility, carrying amount	150,000	150,000
Senior credit facility, fair value	157,125	155,625
9.0% and 9.5% Revenue Bonds [Member]
Disclosures Regarding Financial Instruments [Line Items]
Senior credit facility, carrying amount	24,693	24,920
Senior credit facility, fair value	$ 24,693	$ 24,920

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Property and Equipment (Tables)

6 Months Ended

Jun. 30, 2014

Property Plant And Equipment [Abstract]

Summary of Property and Equipment

Property and equipment consists of the following as of June 30, 2014 and December 31, 2013 (in thousands):

	June 30, 2014			December 31, 2013
Land	$	66,955		$	58,947
Building and improvements		306,219			259,523
Equipment		43,020			36,742
Construction in progress		43,450			44,186
		459,644			399,398
Less accumulated depreciation		(40,258	)		(29,289	)
Property and equipment, net	$	419,386		$	370,109

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Acquisitions - Transaction Related Expenses as Incurred (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Business Combinations [Abstract]
Legal, accounting and other costs	$ 3,016	$ 798	$ 4,136	$ 1,803
Severance and contract termination costs		557	459	1,026
Transaction-related expenses	$ 3,016	$ 1,355	$ 4,595	$ 2,829

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2014

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

13. Commitments and Contingencies

The Company is, from time to time, subject to various claims and legal actions that arise in the ordinary course of the Company’s business, including claims for damages for personal injuries, medical malpractice, breach of contract, tort and employment related claims. In these actions, plaintiffs request a variety of damages, including, in some instances, punitive and other types of damages that may not be covered by insurance. In the opinion of management, the Company is not currently a party to any proceeding that would individually or in the aggregate have a material adverse effect on the Company’s business, financial condition or results of operations.