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): May 8, 2007

Psychiatric Solutions, Inc.

(Exact Name of Registrant as Specified in Its Charter)

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

6640 Carothers Parkway, Suite 500, 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):

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

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

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

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

Item 7.01. Regulation FD Disclosure.

     Psychiatric Solutions, Inc. (the “Company”) is furnishing under Item 7.01 of this Current Report on Form 8-K the information included as Exhibit 99.1 and Exhibit 99.2 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 incremental senior secured term loan.

     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 8.01 Other Events.

     On May 8, 2007, the Company issued a press release announcing that it has commenced a tender offer to purchase for cash any and all of its outstanding 10 5/8% Senior Subordinated Notes due 2013. A copy of the press release is attached hereto as Exhibit 99.3 and incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

99.1	The section of the confidential information memorandum entitled “Executive Summary — Transaction Overview — Pro Forma Capitalization.”
99.2	Unaudited Pro Forma Condensed Combined Financial Information.
99.3	Press Release of Psychiatric Solutions, Inc., dated May 8, 2007.

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: May 8, 2007	By:	/s/ Jack E. Polson
		Jack E. Polson
		Executive Vice President, Chief Accounting Officer

INDEX TO EXHIBITS

Exhibit Number	Description of Exhibits
99.1	The section of the confidential information memorandum entitled “Executive Summary — Transaction Overview — Pro Forma Capitalization.”
99.2	Unaudited Pro Forma Financial Information.
99.3	Press Release of Psychiatric Solutions, Inc., dated May 8, 2007.

EX-99.1

Exhibit 99.1

Pro Forma Capitalization

The following table reflects the pro forma capitalization of the Company after the acquisition of Horizon Health Corporation (“Horizon Health”), assuming the transaction closed on March 31, 2007:

($ in millions)

PRO FORMA CAPITALIZATION

	March 31, 2007
	PSI			Horizon			Pro Forma
Cash	$	15.7					$	15.7
Revolver (1)	$	120.0		$	50.0		$	170.0
Term Loan B		350.0			225.0			575.0
HUD Mortgages		27.0			7.0			34.0
Other		8.0						8.0
Total Senior Secured Debt	$	505.0					$	787.0
7 3/4% Senior Subordinated Notes	$	220.0					$	220.0
Senior Subordinated Debt		—			200.0			200.0
10 5/8% Senior Subordinated Notes		38.7			(38.7	)		—
Total Debt	$	763.7					$	1,207.0
Stockholder’s Equity	$	666.3					$	666.3
Total Book Capitalization	$	1,430.0					$	1,873.3
Credit Statistics
Pro Forma Adjusted LTM EBITDA (4)	$	212.5	(2)	$	48.5	(3)	$	261.0
Senior Secured Debt / Pro Forma Adj. LTM EBITDA (4)		2.4x						3.0x
Total Debt / Pro Forma Adj. LTM EBITDA (4)		3.6						4.6
Net Debt / Pro Forma Adj. LTM EBITDA (4)		3.5						4.6
Total Debt / Total Capitalization		53.4	%					64.4	%

(1)	$300 million capacity.
(2)	Includes PSI LTM and acquisitions completed during 2006 and 2007.
(3)	Includes Horizon Health and pro forma adjustments, including $10 million of assumed synergies.
(4)	Please refer to Exhibit 99.2 for a Reconciliation of Income from Continuing Operations to Adjusted LTM EBITDA and Pro Forma Adjusted LTM EBITDA.

EX-99.2

Exhibit 99.2

Unaudited Pro Forma Financial Information

	Pro Forma LTM
	3/31/07
($ in millions)
Selected Operating Data (1):
Net Revenue	$	1,582.3
Adjusted EBITDA		261.0
Cash paid for Capital Expenditures		47.5
Cash Interest Expense (2)		88.9
Cash Taxes (3)		47.2

(1)	Assumes the acquisition of Horizon Health and other acquisitions completed since April 1, 2006, occurred on April 1, 2006.
(2)	Includes $225 million incremental Term Loan borrowing, $50 million incremental revolver borrowing and $200 million in additional Senior Subordinated Debt.
(3)	Based on pro forma earnings before taxes, assuming tax rate of 38.3%.

RECONCILIATION OF INCOME FROM
CONTINUING OPERATIONS TO
ADJUSTED LTM EBITDA AND
PRO FORMA ADJUSTED LTM EBITDA
FOR THE TWELVE MONTHS ENDED MARCH 31, 2007
(UNAUDITED, in thousands)

			Horizon		Other
	PSI		Health (b)		Acquisitions (b)		Pro Forma
Income from continuing operations	$	67,627	$	10,628	$	6,426	$	84,681
Provision for income taxes		41,170		8,238		4,277		53,685
Interest expense		45,485		8,959		3,381		57,825
Depreciation and amortization		22,173		6,434		3,506		32,113
Minority interest		—		246		—		246
Other expenses:
Share based compensation		9,954		1,859		—		11,813
Horizon Health merger and transaction costs		—		2,145		—		2,145
Management fee paid to parent		—		—		5,361		5,361
Total other expenses		9,954		4,004		5,361		19,319
Adjusted EBITDA (a)	$	186,409	$	38,509	$	22,951	$	247,869
Pro Forma Adjustments:
Reduction of overhead expenses		—		10,000		3,094		13,094
Pro Forma Adjusted EBITDA (a)	$	186,409	$	48,509	$	26,045	$	260,963

(a)

Adjusted EBITDA is a non-GAAP financial measure. Adjusted EBITDA is defined as income from continuing operations before interest expense (net of interest income), income taxes, depreciation, amortization, minority interest, 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 adjusted EBITDA as the primary measure 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 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 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 adjusted EBITDA is not a measure of financial performance under accounting principles generally accepted in the United States and is susceptible to varying calculations, it may not be comparable to similarly titled measures of other companies.

(b)

Assumes that PSI had completed the acquisitions of Horizon Health and Other Acquisitions on April 1, 2006. Other Acquisitions refers to various acquisitions PSI completed since April 1, 2006.

EX-99.3

Exhibit 99.3

PSYCHIATRIC SOLUTIONS ANNOUNCES CASH TENDER OFFER AND CONSENT SOLICITATION
FOR ITS 10 5/8% SENIOR SUBORDINATED NOTES DUE 2013

     FRANKLIN, Tenn., May 8, 2007 (BUSINESS WIRE) — Psychiatric Solutions, Inc. (“PSI”) (NASDAQ: PSYS) today announced that it has commenced a cash tender offer to purchase any and all of its outstanding 10 5/8% Senior Subordinated Notes due 2013 (the “Notes”), of which approximately $38.7 million in aggregate principal amount is outstanding, and a solicitation of consents (“Consents”) from the holders of the Notes to certain proposed amendments to the indenture governing the Notes. The tender offer and consent solicitation are being made pursuant to an Offer to Purchase and Consent Solicitation, dated as of May 8, 2007 (the “Offer to Purchase”), and a related Consent and Letter of Transmittal, which more fully set forth the terms and conditions of the tender offer and consent solicitation. PSI is conducting the tender offer in conjunction with the debt financing to be obtained in connection with its pending transaction with Horizon Health Corporation.

     The tender offer is scheduled to expire at 11:59 p.m., New York City time, on June 5, 2007 (the “Expiration Date”), unless extended or earlier terminated. Holders of the Notes must tender and not withdraw their Notes and deliver and not rescind their corresponding Consents on or before the consent date (the “Consent Date”), which is 5:00 p.m., New York City time, on May 21, 2007, unless extended or earlier terminated, to receive the total consideration, which includes a consent payment of $20 per $1,000 principal amount of Notes. Holders of the Notes who tender their Notes after the Consent Date but on or before the Expiration Date will receive the tender consideration, which is the total consideration minus the consent payment.

     The tender consideration for each $1,000 principal amount of the notes tendered and accepted for payment will be determined in the manner described in the Offer to Purchase by reference to the fixed spread of 50 basis points over the yield to maturity of the reference treasury security, 4.875% U.S. Treasury Note due May 31, 2008, as calculated by the dealer managers at 2:00 p.m., New York City time, on May 21, 2007, unless such date is extended.

     In addition to the total consideration or the tender consideration, as applicable, holders of the Notes tendered and accepted for payment will receive accrued and unpaid interest on the Notes from the last interest payment date for the Notes to, but not including, the applicable settlement date.

     Except as set forth in the Offer to Purchase or as required by applicable law, the Notes tendered may be withdrawn and Consents delivered may be revoked at any time on or prior to the Consent Date by following the procedures described in the Offer to Purchase. The Notes tendered on or prior to the Consent Date that are not validly withdrawn on or prior to the Consent Date may not be withdrawn thereafter. Tenders of the Notes after the Consent Date may not be withdrawn.

     PSI currently expects to have an initial settlement for Notes tendered on or before the Consent Date promptly after the satisfaction of the Financing Condition (as defined below) (expected to occur on May 31, 2007), followed by a final settlement promptly after the expiration of the tender offer for Notes tendered after the Consent Date. PSI reserves the right to extend or forego the initial settlement date, as a result of which the initial settlement date may occur as late as the final settlement date.

     The tender offer and consent solicitation are conditioned on the satisfaction of certain conditions, including but not limited to, (i) the tender on or prior to the Consent Date of the Notes representing a majority of the principal amount of the Notes outstanding, (ii) the execution by the trustee of the supplemental indenture implementing the proposed amendments following receipt of the requisite consents, and (iii) the receipt of debt financing sufficient to pay the total consideration for all of the outstanding Notes and related fees and expenses (this clause (iii), the “Financing Condition”). If the Financing Condition or any other condition in the Offer to Purchase is not satisfied, PSI is not obligated to accept for purchase, or to pay for, the Notes tendered (and corresponding Consents) and may delay the acceptance for payment of, any tendered Notes, in each event, subject to applicable laws, and may terminate, extend or amend the tender offer and may postpone the acceptance for purchase of, and payment for, the Notes so tendered.

     PSI has retained Citi and Merrill Lynch & Co. to serve as the dealer managers for the tender offer. PSI has retained Global Bondholder Services Corporation to serve as the depositary and information agent for the tender offer and consent solicitation.

     Requests for documents may be directed to Global Bondholder Services Corporation by telephone at (866) 873-7700 or (212) 430-3774 or in writing at 65 Broadway — Suite 723, New York, New York 10006. Questions regarding the tender offer or consent solicitation may be directed to Citi at (800) 558-3745 or (212) 723-6106 or Merrill Lynch & Co. at (888) 654-8637 or (212) 449-4914.

     This press release is neither an offer to purchase nor a solicitation of an offer to sell the Notes or any other securities. The tender offer is made only by and pursuant to the terms of the Offer to Purchase and the related Consent and Letter of Transmittal. None of PSI, the dealer managers, the depositary or the information agent makes any recommendations as to whether holders should tender their Notes pursuant to the tender offer. Holders must make their own decisions as to whether to tender the Notes, and, if so, the principal amount of the Notes to tender.

     PSI offers an extensive continuum of behavioral health programs to critically ill children, adolescents and adults through its operation of 75 owned or leased freestanding psychiatric inpatient facilities with more than 8,000 beds in 29 states, Puerto Rico and the U.S. Virgin Islands. PSI also manages freestanding psychiatric inpatient facilities for government agencies and psychiatric inpatient units within medical/surgical hospitals owned by others.

     This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All forward-looking statements are based on assumptions that PSI believes to be reasonable. However, actual results almost always vary from assumed facts and the differences can be material, depending upon the circumstances. As a result, you should not place undue reliance on such forward-looking statements. The words “believe,” “expect,” “estimate,” “anticipate” and similar expressions will generally identify forward-looking statements. All of PSI ‘s forward-looking statements, whether written or oral, are expressly qualified by these cautionary statements and any other cautionary statements that may accompany such forward-looking statements. In addition, PSI disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date of this release.

     With this in mind, you should consider the risks discussed in the Offer to Purchase, under the caption “Risk Factors” in PSI’s Annual Report on Form 10-K and in the other documents PSI files with the SEC from time to time, which could cause actual results to differ materially from those expressed in any forward-looking statement made by PSI or on PSI’s behalf.

CONTACT: Psychiatric Solutions, Inc.
Brent Turner, (615) 312-5700
Executive Vice President, Finance and Administration

SOURCE: Psychiatric Solutions, Inc.