8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

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

Date of report (Date of earliest event reported): November 7, 2006

Psychiatric Solutions, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	0-20488	23-2491707
(State or Other Jurisdiction of	(Commission File Number)	(IRS Employer
Incorporation)		Identification No.)

840 Crescent Centre Drive, Suite 460, Franklin, Tennessee 37067
(Address of Principal Executive Offices)

(615) 312-5700
(Registrant’s Telephone Number, including Area Code)

Not Applicable
(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (See General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

	Item 7.01. Regulation FD Disclosure.
	Item 9.01. Financial Statements and Exhibits.
SIGNATURES
INDEX TO EXHIBITS
Ex-99.1 Press Release of Psychiatric Solutions, Inc.
Ex-99.2 The section of the confidential information memorandum entitled "Executive Summary - Transaction Overview - Pro Forma Capitalization
Ex-99.3 Unaudited Pro Forma Financial Information
Ex-99.4 The section of the confidential information memorandum entitled "Historical Financial Information - Alternative Behavioral Services, Inc."

Item 7.01. Regulation FD Disclosure.

     On November 7, 2006, Psychiatric Solutions, Inc. (the “Company”) issued a press release announcing the Company’s plans for financing the acquisition of all of the capital stock of Alternative Behavioral Services, Inc. The press release is furnished herewith as Exhibit 99.1 hereto and is incorporated herein by reference.

     The Company is furnishing under Item 7.01 of this Current Report on Form 8-K the information included as Exhibit 99.2 through Exhibit 99.4 to this Form 8-K. This information, which has not been previously reported to the public, is disclosed in a confidential information memorandum that is being furnished to prospective lenders in connection with the Company’s proposed amendment to the Company’s senior secured credit facilities.

     This information is furnished under Item 7.01 of Form 8-K and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section, unless the Company specifically incorporates it by reference in a document filed under the Securities Act of 1933 or the Securities Exchange Act of 1934. By filing this report on Form 8-K and furnishing this information, the Company makes no admission as to the materiality of any information in this report that is required to be disclosed solely by reason of Regulation FD.

Item 9.01. Financial Statements and Exhibits.

     (d) Exhibits.

99.1	Press Release of Psychiatric Solutions, Inc., dated November 7, 2006.
99.2	The section of the confidential information memorandum entitled “Executive Summary — Transaction Overview — Pro Forma Capitalization.”
99.3	Unaudited Pro Forma Financial Information
99.4	The section of the confidential information memorandum entitled “Histoical Financial Information - Alternative Behavioral Services, Inc.“

SIGNATURES

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

	PSYCHIATRIC SOLUTIONS, INC.
Date: November 7, 2006	By:	/s/ Christopher L. Howard
		Christopher L. Howard
		Executive Vice President, General Counsel and Secretary

INDEX TO EXHIBITS

Exhibit Number		Description of Exhibits
	99.1	Press Release of Psychiatric Solutions, Inc., dated November 7, 2006.
	99.2	The section of the confidential information memorandum entitled “Executive Summary — Transaction Overview — Pro Forma Capitalization.”
	99.3	Unaudited Pro Forma Financial Information
	99.4	The section of the confidential information memorandum entitled “Historical Financial Information - Alternative Behavioral Services, Inc.“

EX-99.1

Exhibit 99.1

[PSYCHIATRIC SOLUTIONS, INC. LOGO]

Contact:
Brent Turner
Executive Vice President,
Finance and Administration
(615) 312-5700

PSYCHIATRIC SOLUTIONS TO LAUNCH FINANCING FOR ACQUISITION OF
ALTERNATIVE BEHAVIORAL SERVICES, INC.

Increases 2007 Earnings Guidance to $1.42 to $1.46 per Diluted Share

FRANKLIN, Tenn. (November 7, 2006) — Psychiatric Solutions, Inc. (“PSI”) (NASDAQ: PSYS) today announced the launch of its amended and restated Senior Secured Credit Facilities. The Company plans to increase its existing term loan by $150 million and expand its revolver by $150 million. The add-on to the term loan and a portion of the revolver will be used to finance the $210 million cash purchase of Alternative Behavioral Services, Inc. (“ABS”), which is expected to occur on December 1, 2006, subject to customary closing conditions. Citigroup Global Markets Inc. and Banc of America Securities LLC are acting as Joint Bookrunning Manager and Joint Lead Arranger on the $150 million add on to the term loan and Banc of America is acting as Sole Lead Arranger and Sole Bookrunner on the revolving credit facility.

     PSI also announced that it has increased its guidance for 2007 earnings per diluted share to a range to $1.42 to $1.46 from the previous range of $1.37 to $1.41. The Company’s guidance has been increased to reflect the positive impact of the ABS acquisition. This guidance does not include the impact from any other future acquisitions.

     Joey Jacobs, Chairman, President and Chief Executive Officer of PSI, remarked, “We are pleased to increase our earnings guidance for 2007 as a result of our anticipated acquisition of ABS. We not only expect the ABS facilities to be accretive to our 2007 results, but we also expect to produce further growth in revenues and profit margins at the ABS facilities in subsequent years.”

-MORE-

PSYS to Launch Financing
Page 2
November 7, 2006

     This press release contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements other than those made solely with respect to historical fact and are based on the intent, belief or current expectations of PSI and its management. PSI’s business and operations are subject to a variety of risks and uncertainties that might cause actual results to differ materially from those projected by any forward-looking statements. Factors that could cause such differences include, but are not limited to: (1) PSI’s ability to complete the ABS acquisition and to successfully integrate the ABS facilities; (2) potential competition which alters or impedes PSI’s acquisition strategy by decreasing PSI’s ability to acquire additional inpatient facilities on favorable terms; (3) the ability of PSI to improve the operations of acquired inpatient facilities, including the ABS facilities; (4) the ability to maintain favorable and continuing relationships with physicians who use PSI’s facilities; (5) the ability to receive timely additional financing on terms acceptable to PSI to fund PSI’s acquisition strategy and capital expenditure needs including financing for ABS; (6) risks inherent to the health care industry, including the impact of unforeseen changes in regulation, reimbursement rates from federal and state health care programs or managed care companies and exposure to claims and legal actions by patients and others; (7) PSI’s ability to comply with applicable licensure and accreditation requirements; and (8) potential difficulties in integrating recently acquired operations with PSI. The forward-looking statements herein are qualified in their entirety by the risk factors set forth in PSI’s filings with the Securities and Exchange Commission. PSI undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. Readers should not place undue reliance on forward-looking statements, which reflect management’s views only as of the date hereof.

     PSI offers an extensive continuum of behavioral health programs to critically ill children, adolescents and adults through its operation of 64 owned or leased freestanding psychiatric inpatient facilities with approximately 6,900 beds in 27 states. PSI also manages freestanding psychiatric inpatient facilities for government agencies and psychiatric inpatient units within medical/surgical hospitals owned by others.

- END -

EX-99.2

Exhibit 99.2

Pro Forma Capitalization

The following table reflects the pro forma capitalization of the Company after the ABS Acquisition, assuming the transaction closed on September 30, 2006:

($ in millions)

PRO FORMA CAPITALIZATION

	September 30, 2006
	PSI			ABS			Pro Forma
Cash	$	10.5		$	(1.4	)	$	9.1
Revolver(1)	$	52.0		$	60.0		$	112.0
Term Loan B		200.0			150.0			350.0
HUD Mortgages		27.1						27.1
Total Senior Secured Debt	$	279.1					$	489.1
7 3/4% Senior Sub. Notes	$	220.0					$	220.0
10 5/8% Senior Sub. Notes		38.7						38.7
Other		0.6						0.6
Total Debt	$	538.4					$	748.4
Stockholder’s Equity	$	604.2					$	604.2
Total Capitalization	$	1,142.6					$	1,352.6
Credit Statistics
PF Adj. LTM EBITDA (2)	$	171.7		$	19.8		$	191.5
Senior Secured Debt / PF Adj. LTM EBITDA (2)		1.6x						2.6x
Total Debt / PF Adj. LTM EBITDA (2)		3.1						3.9
Net Debt / PF Adj. LTM EBITDA (2)		3.1						3.9
Total Debt / Total Capitalization		47.1	%					55.3	%

(1) Current $150 million capacity will be increased to $300 million of total capacity at close.

(2) Please refer to Exhibit 99.3 for a Reconciliation of Income from Continuing Operations to Adjusted LTM EBITDA and Pro Forma Adjusted LTM EBITDA.

Note: ABS EBITDA reflects facility-level EBITDA less PSI corporate overhead allocation of $4.0 million

EX-99.3

Exhibit 99.3

Unaudited Pro Forma Financial Information

	Pro Forma LTM
($ in millions)	9/30/06
Selected Operating Data (1):
Net Revenue	$	1,241.0
Adjusted EBITDA		191.5
Cash paid for Capital Expenditures (2)		37.2
Cash Interest Expense (3)		55.1
Cash Taxes (4)		40.8

(1)	Assumes the acquisitions of Alternative Behavioral Services, Inc. and other 2006 acquisitions occurred on October 1, 2005.
(2)	Assumes Capital Expenditures approximate 3% of Net Revenues.
(3)	Includes $150 million incremental Term Loan borrowing and $60 million incremental Revolver borrowing.
(4)	Based on pro forma earnings before taxes, assuming tax rate of 38.0%.

RECONCILIATION OF INCOME FROM
CONTINUING OPERATIONS TO
ADJUSTED LTM EBITDA AND
PRO FORMA ADJUSTED LTM EBITDA
FOR THE TWELVE MONTHS ENDED SEPTEMBER 30, 2006
(UNAUDITED, in thousands)

	PSI		ABS			Pro Forma
Income from continuing operations	$	58,095	$	(5,106	)	$	52,989
Provision for income taxes		35,638		(3,960	)		31,678
Net interest expense		37,426		17,520			54,946
Depreciation and amortization		19,382		3,951			23,333
Other expenses:
Share based compensation		10,449		—			10,449
Management fee paid to parent		—		1,383			1,383
Loss on disposals of property, plant and equipment		—		53			53
Total other expenses		10,449		1,436			11,885
Adjusted EBITDA (a)	$	160,990	$	13,841		$	174,831
PSI Adjustments:
Other 2006 acquisitions		10,691		—			10,691
ABS Adjustments:
Reduction of ABS overhead expenses		—		5,300			5,300
Operations expected to be discontinued		—		694			694
Pro Forma Adjusted EBITDA (a)	$	171,681	$	19,835		$	191,516

(a) EBITDA and adjusted EBITDA are non-GAAP financial measures. EBITDA is defined as income from continuing operations before interest expense (net of interest income), income taxes, depreciation and amortization. Adjusted EBITDA is defined as income from continuing operations before interest expense (net of interest income), income taxes, depreciation, amortization, stock compensation and other items included in the caption above labeled “Other expenses”. These other expenses may occur in future periods but the amounts recognized can vary significantly from period to period and do not directly relate to the ongoing operations of our health care facilities. PSI’s management relies on EBITDA and adjusted EBITDA as the primary measures to review and assess operating performance of its facilities and their management teams. PSI believes it is useful to investors to provide disclosures of its operating results on the same basis as that used by management. Management and investors also review EBITDA and adjusted EBITDA to evaluate PSI’s overall performance and to compare PSI’s current operating results with corresponding periods and with other companies in the health care industry. You should not consider EBITDA and adjusted EBITDA in isolation or as a substitute for net income, operating cash flows or other cash flow statement data determined in accordance with accounting principles generally accepted in the United States. Because EBITDA and adjusted EBITDA are not measures of financial performance under accounting principles generally accepted in the United States and are susceptible to varying calculations, they may not be comparable to similarly titled measures of other companies.

EX-99.4

Exhibit 99.4

Alternative Behavioral Services, Inc. (ABS)

     The following historical financial results of Alternative Behavioral Services are unaudited, preliminary and subject to change upon completion of an audit.

     HISTORICAL FINANCIAL RESULTS — ABS

(in thousands)

	Twelve months ended						Nine months ended
	December 31,						September 30,
													LTM
	2004			2005			2005			2006			9/30/06
Revenue		179,534			190,336			142,007			151,560			199,889
Operating and administrative expenses		163,342			178,523			133,915			142,823			187,431
Depreciation and amortization		3,638			4,139			3,099			2,911			3,951
Impairment loss on assets held for sale		1,969			—			—			—			—
(Gain) Loss on disposals of property, plant and equipment		(1,089	)		60			11			4			53
Operating expenses		167,860			182,722			137,025			145,738			191,435
Operating income		11,674			7,614			4,982			5,822			8,454
Non-operating income (expense)
Interest income		137			93			79			48			62
Interest allocation from parent		(8,271	)		(14,986	)		(10,702	)		(12,355	)		(16,639	)
Interest expense		(47	)		(1,171	)		(884	)		(656	)		(943	)
Equity in earnings of unconsolidated affiliate		(112	)		—			—			—			—
Net loss before income taxes		3,381			(8,450	)		(6,525	)		(7,141	)		(9,066	)
Income tax (provision) benefit		(1,153	)		5,209			3,458			2,209			3,960
Net income (loss)		2,228			(3,241	)		(3,067	)		(4,932	)		(5,106	)

ALTERNATIVE BEHAVIORAL SERVICES, INC.
RECONCILIATION OF NET INCOME TO EBITDA AND ADJUSTED EBITDA (UNAUDITED)
(in thousands)

	Twelve months ended						Nine months ended
	December 31,						September 30,
													LTM
	2004			2005			2005			2006			9/30/06
Net income (loss)		2,228			(3,241	)		(3,067	)		(4,932	)		(5,106	)
Income tax provision (benefit)		1,153			(5,209	)		(3,458	)		(2,209	)		(3,960	)
Depreciation and amortization		3,638			4,139			3,099			2,911			3,951
Net interest expense		8,181			16,064			11,507			12,963			17,520
EBITDA (a)		15,200			11,753			8,081			8,733			12,405
Other expenses:
Management fee to parent		1,915			2,099			1,592			876			1,383
Impairment loss on assets held for sale		1,969			—			—			—			—
Equity in earnings of unconsolidated affiliate		112			—			—			—			—
(Gain) Loss on disposals of property, plant and equipment		(1,089	)		60			11			4			53
Total other expenses		2,907			2,159			1,603			880			1,436
Adjusted EBITDA (a)		18,107			13,912			9,684			9,613			13,841

(a) EBITDA and adjusted EBITDA are non-GAAP financial measures. EBITDA is defined as income from continuing operations before interest expense (net of interest income), income taxes, depreciation and amortization. Adjusted EBITDA is defined as income from continuing operations before interest expense (net of interest income), income taxes, depreciation, amortization, stock compensation and other items included in the caption above labeled “Other expenses”. These other expenses may occur in future periods but the amounts recognized can vary significantly from period to period and do not directly relate to the ongoing operations of our health care facilities. PSI’s management relies on EBITDA and adjusted EBITDA as the primary measures to review and assess operating performance of its facilities and their management teams. PSI believes it is useful to investors to provide disclosures of its operating results on the same basis as that used by management. Management and investors also review EBITDA and adjusted EBITDA to evaluate PSI’s overall performance and to compare PSI’s current operating results with corresponding periods and with other companies in the health care industry. You should not consider EBITDA and adjusted EBITDA in isolation or as a substitute for net income, operating cash flows or other cash flow statement data determined in accordance with accounting principles generally accepted in the United States. Because EBITDA and adjusted EBITDA are not measures of financial performance under accounting principles generally accepted in the United States and are susceptible to varying calculations, they may not be comparable to similarly titled measures of other companies.