8-K/A

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K/A

(Amendment No. 1)

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

Date of report (Date of earliest event reported): July 6, 2007 (May 31, 2007)

Psychiatric Solutions, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	0-20488	23-2491707
(State or Other	(Commission File Number)	(IRS Employer
Jurisdiction of		Identification
Incorporation)		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))

TABLE OF CONTENTS

Ex-99.1 Unaudited Pro Forma Condensed Combined Financial Information

Item 2.01. Completion of Acquisition or Disposition of Assets.

     This Current Report on Form 8-K/A amends the Current Report on Form 8-K of Psychiatric Solutions, Inc. (the “Company”) filed on June 1, 2007 and is being filed solely for the purpose of including the unaudited pro forma condensed combined financial information for the Company required by Item 9.01(b) of Form 8-K. The Company filed the Current Report on Form 8-K on June 1, 2007 to report, among other things, the merger of a wholly-owned direct subsidiary of the Company with and into Horizon Health Corporation, effective as of 11:59 p.m., Eastern Daylight Time, on May 31, 2007.

Item 9.01. Financial Statements and Exhibits.

(b)	Pro Forma Financial Information.
	Unaudited pro forma condensed combined financial information for Psychiatric Solutions, Inc. is attached hereto as Exhibit 99.1.
(d)	Exhibits.

99.1 Unaudited Pro Forma Condensed Combined Financial Information for Psychiatric Solutions, 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.
By:	/s/ Jack E. Polson
	Jack E. Polson
	Executive Vice President, Chief Accounting Officer

Date: July 6, 2007

INDEX TO EXHIBITS

Exhibit Number	Description of Exhibits
99.1	Unaudited Pro Forma Condensed Combined Financial Information for Psychiatric Solutions, Inc.

EX-99.1

EXHIBIT 99.1

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The following unaudited pro forma condensed combined financial statements were prepared using the historical consolidated financial statements of Psychiatric Solutions, Inc. (“Psychiatric Solutions”), Horizon Health Corporation (“Horizon Health”) and those entities we acquired since the beginning of the respective period presented. The following tables set forth the unaudited pro forma condensed combined financial statements for Psychiatric Solutions, giving effect to the Acquisition, the sale of $250.0 million of 7³/₄% senior subordinated notes due 2015 (“7³/₄% Notes”), an amendment to Psychiatric Solutions’ existing senior secured credit facilities that provides for additional term loans of $225.0 million, and a tender offer to purchase for cash any and all of Psychiatric Solutions’ outstanding 10⁵/₈% senior subordinated notes due 2013 (“10⁵/₈% Notes”) (collectively, the “Transactions”) and to acquisitions completed since the beginning of the respective period presented as if they had occurred on the dates indicated and after giving effect to certain pro forma adjustments discussed herein. The sale of $250.0 million of 7³/₄% Notes, an amendment to Psychiatric Solutions’ existing senior secured credit facilities that provides for additional term loans of $225.0 million, and a tender offer to purchase for cash any and all of Psychiatric Solutions’ outstanding 10⁵/₈% senior subordinated notes due 2013 are collectively referred to as the “Financing Transactions.” The acquisition of Horizon Health is referred to herein as the “Acquisition.”

The unaudited pro forma condensed combined balance sheet as of March 31, 2007 assumes that the Transactions took place on March 31, 2007 and combines Psychiatric Solutions’ unaudited balance sheet as of March 31, 2007 with the unaudited balance sheet of Horizon Health as of February 28, 2007. The unaudited pro forma condensed combined income statements for the three months ended March 31, 2007 and the year ended December 31, 2006 assume that the Transactions and all acquisitions completed since the beginning of the respective period presented took place on the first day of the period presented. The unaudited pro forma condensed combined income statement for the three months ended March 31, 2007 combines Psychiatric Solutions’ unaudited consolidated income statement for the three months ended March 31, 2007 with the unaudited consolidated income statement of Horizon Health for the three months ended February 28, 2007. The unaudited pro forma condensed combined income statement for the year ended December 31, 2006 combines Psychiatric Solutions’ audited consolidated income statement for the fiscal year ended December 31, 2006 with the unaudited consolidated income statement of Horizon Health for the twelve months ended November 30, 2006 and unaudited income statements of the entities acquired since January 1, 2006 for the period after January 1, 2006 but prior to the closing date of the acquisition.

The adjustments necessary to fairly present the unaudited pro forma condensed combined financial statements have been made based on available information and in the opinion of management are reasonable. Assumptions underlying the pro forma adjustments are described in the notes to the “Unaudited Pro Forma Condensed Combined Financial Information” included elsewhere in this Current Report on Form 8-K/A. The pro forma adjustments are preliminary and revisions to the preliminary purchase price allocations and financing of the Transactions may have a significant impact on the pro forma adjustments. A final valuation of net assets acquired associated with the Acquisition cannot be made prior to the filing of this Current Report on Form 8-K/A. A final determination of these fair values will be conducted by Psychiatric Solutions’ independent valuation specialists. The consideration of this valuation will most likely result in a change in the value assigned to the fixed and intangible assets acquired from Horizon Health.

The unaudited pro forma condensed combined financial statements are for comparative purposes only and do not purport to represent what our financial position or results of operations would actually have been had the events noted above in fact occurred on the assumed dates or to project our financial position or results of operations for any future date or future period. The unaudited pro forma condensed combined financial statements should be read in conjunction with the “Selected Financial Data”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements of Psychiatric Solutions and Horizon Health included in each company’s Annual Report on Form 10-K for the year ended December 31, 2006 and August 31, 2006, respectively, and the consolidated financial statements of Alternative Behavioral Services, Inc., furnished in a Current Report on Form 8-K on May 22, 2007.

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
As of March 31, 2007

					Pro Forma
	Psychiatric				Adjustments For the			Pro Forma
	Solutions		Horizon Health		Transactions			PSI
	(Dollars in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	15,669	$	1,986	$	—		$	17,655
Accounts receivable, net		190,748		46,895		—			237,643
Other current assets		44,620		15,524		—			60,144
Total current assets		251,037		64,405		—			315,442
Property and equipment, net		562,473		99,453		—			661,926
Costs in excess of net assets acquired		776,395		108,997		185,760	(1)		1,071,152
Other assets		33,592		46,170		(7,321	)(2)		72,441
Total assets	$	1,623,497	$	319,025	$	178,439		$	2,120,961
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	25,411	$	6,257	$	—		$	31,668
Accrued liabilities		102,172		27,207		—			129,379
Current portion of long-term debt		2,836		73		2,250	(3)		5,159
Total current liabilities		130,419		33,537		2,250			166,206
Long-term debt, less current portion		760,842		102,998		335,069	(3)		1,198,909
Other liabilities		65,964		17,919		11,312	(4)		95,195
Total liabilities		957,225		154,454		348,631			1,460,310
Total stockholders’ equity		666,272		164,571		(170,192	)(5)		660,651
Total liabilities and stockholders’ equity	$	1,623,497	$	319,025	$	178,439		$	2,120,961

See Notes to Unaudited Pro Forma Condensed Combined Balance Sheet.

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
(Dollars in thousands)

(1) Represents adjustment to cost in excess of net assets acquired as follows:

Cash paid to Horizon Health stockholders and lenders	$	417,100
Less: net assets acquired(a)		(31,329	)
Cost in excess of net assets acquired		385,771
Horizon Health’s historical cost in excess of net assets acquired		(108,997	)
Payoff of Horizon Health’s revolving credit facility		(96,100	)
Estimate of purchase transaction costs		5,086
Pro forma adjustment to cost in excess of net assets acquired	$	185,760

(a) Net assets of Horizon Health	$	164,571
Cost in excess of net assets acquired of Horizon Health		(108,997	)
Pro forma adjustments to:
Other assets		(12,933	)
Other liabilities		(11,312	)
Net assets acquired	$	31,329

(2) Represents adjustment to other assets as follows:

Estimated value of other assets acquired	$	33,237
Estimated capitalized financing costs related to Transactions		6,683
Write-off of capitalized financing costs related to 105/8% Notes tendered		(1,071	)
Less: Horizon Health’s historical other assets		(46,170	)
	$	(7,321	)

(3) Represents the sources and uses of funds for the Transactions:

73/4% Notes sold	$	256,875
Additional senior secured term loan		225,000
Pay down Psychiatric Solutions’ revolving credit facility		(9,775	)
Payoff of Horizon Health’s revolving credit facility(a)		(96,100	)
Tender purchase price for 105/8% Notes		(38,681	)
Increase in debt		337,319
Less: increase in current portion of long-term debt		(2,250	)
Increase in long-term debt, less current portion	$	335,069

(a) The actual cash payment is subject to change based on the final balance of Horizon Health’s revolving credit facility on the closing date of the Acquisition.

(4)	Represents an adjustment to long-term deferred tax liabilities related to the step-up in basis of the value of Horizon Health’s contracts.
(5)	Represents elimination of Horizon Health’s stockholders’ equity and non-recurring fees and charges on loans incurred in connection with the Financing Transactions as summarized below:

Elimination of Horizon Health’s stockholders’ equity	$	164,571
Premium on tender for 105/8% Notes		3,900
Write-off of capitalized loan costs related to 105/8% Notes tendered		1,071
Cash paid to exit swap agreements		650
	$	170,192

UNAUDITED PRO FORMA CONDENSED COMBINED INCOME STATEMENT
For the Three Months Ended March 31, 2007

												Financing
												Transactions
	Psychiatric		Horizon			Pro Forma			Pro Forma			Pro Forma			Pro Forma
	Solutions		Health			Adjustments			Combined			Adjustments			PSI
	(Dollars in thousands except per share amounts)
Revenue	$	323,718	$	71,431		$	—		$	395,149		$	—		$	395,149
Expenses
Salaries, wages and employee benefits		180,999		41,167			(1,885	)(1)(a)		220,281			—			220,281
Professional fees		31,035		8,001			(464	)(1)(b)		38,572			—			38,572
Supplies		18,477		3,211			—			21,688			—			21,688
Rentals and leases		4,637		1,177			—			5,814			—			5,814
Other operating expenses		31,774		7,565			—			39,339			—			39,339
Provision for doubtful accounts		6,706		3,244			—			9,950			—			9,950
Depreciation and amortization		6,298		1,696			666	(1)(d)		8,660			—			8,660
Interest expense (income)		14,386		2,252			(2,252	)(1)(e)		14,386			7,958	(1)(e)		22,344
Other expenses		—		(12	)		—			(12	)		—			(12	)
Total expenses		294,312		68,301			(3,935	)		358,678			7,958			366,636
Income (loss) from continuing operations before income taxes		29,406		3,130			3,935			36,471			(7,958	)		28,513
Provision for (benefit from) income taxes		11,262		1,156			1,550	(1)(g)		13,968			(3,048	)(1)(g)		10,920
Income (loss) from continuing operations	$	18,144	$	1,974		$	2,385		$	22,503		$	(4,910	)	$	17,593
Basic pro forma earnings per share															$	0.33
Diluted pro forma earnings per share															$	0.32
Shares used in computing per share amounts:
Basic																53,804
Diluted																55,237

See Notes to Unaudited Pro Forma Condensed Combined Income Statements.

UNAUDITED PRO FORMA CONDENSED COMBINED INCOME STATEMENT
For the Year Ended December 31, 2006

							Financing
							Transactions
	Psychiatric		Pro Forma		Pro Forma		Pro Forma			Pro Forma
	Solutions		Acquisitions(1)		Combined		Adjustments			PSI
	(Dollars in thousands except per share amounts)
Revenue	$	1,026,490	$	528,928	$	1,555,418	$	—		$	1,555,418
Expenses:
Salaries, wages and employee benefits		580,223		279,125		859,348		—			859,348
Professional fees		97,613		50,560		148,173		—			148,173
Supplies		59,310		24,091		83,401		—			83,401
Rentals and leases		13,685		7,141		20,826		—			20,826
Other operating expenses		95,759		78,934		174,693		—			174,693
Provision for doubtful accounts		19,586		11,600		31,186		—			31,186
Depreciation and amortization		20,619		10,933		31,552		—			31,552
Interest expense, net		40,307		16,856		57,163		31,832	(1)(e)		88,995
Other expenses		—		254		254		—			254
Total expenses		927,102		479,494		1,406,596		31,832			1,438,428
Income (loss) from continuing operations before income taxes		99,388		49,434		148,822		(31,832	)		116,990
Provision for (benefit from) income taxes		37,507		18,656		56,163		(12,011	)(1)(g)		44,152
Income (loss) from continuing operations	$	61,881	$	30,778	$	92,659	$	(19,821	)	$	72,838
Basic pro forma earnings per share										$	1.37
Diluted pro forma earnings per share										$	1.34
Shares used in computing per share amounts (h):
Basic											53,314
Diluted											54,531

See Notes to Unaudited Pro Forma Condensed Combined Income Statement.

NOTES TO UNAUDITED PRO FORMA
CONDENSED COMBINED INCOME STATEMENTS
(Dollars in thousands)

(1) The following pro forma condensed combined income statement for the year ended December 31, 2006 sets forth the pro forma operations of Horizon Health and nine non-significant acquisitions applying the purchase method of accounting as if the acquisitions, which were completed on various dates after January 1, 2006, had occurred on January 1, 2006.

							Acquisition
	Horizon		Non-significant		Acquisitions		Pro Forma			Pro Forma
	Health		Acquisitions		Combined		Adjustments			Acquisitions
Revenue	$	289,824	$	239,104	$	528,928	$	—		$	528,928
Expenses:
Salaries, wages and employee benefits		163,622		125,547		289,169		(10,044	)(1)(a)		279,125
Professional fees		27,002		25,712		52,714		(2,154	)(1)(b)		50,560
Supplies		12,242		11,849		24,091		—			24,091
Rentals and leases		4,140		3,212		7,352		(211	)(1)(c)		7,141
Other operating expenses		39,710		39,224		78,934		—			78,934
Provision for doubtful accounts		8,796		2,804		11,600		—			11,600
Depreciation and amortization		6,017		4,471		10,488		445	(1)(d)		10,933
Interest expense		7,438		805		8,243		8,613	(1)(e)		16,856
Other expenses		254		7,247		7,501		(7,247	)(1)(f)		254
Total expenses		269,221		220,871		490,092		(10,598	)		479,494
Income from continuing operations before income taxes		20,603		18,233		38,836		10,598			49,434
Provision for income taxes		8,168		3,656		11,824		6,832	(1)(g)		18,656
Income from continuing operations	$	12,435	$	14,577	$	27,012	$	3,766		$	30,778

(a) Reflects adjustments to salaries, wages and employee benefits to exclude corporate level executive, finance, information systems and other administrative employees at Horizon Health and facilities acquired as part of certain non-significant acquisitions.

	Year Ended			Three Months Ended
	December 31, 2006			March 31, 2007
Salaries, wages and employee benefits of corporate level employees at facilities related to non-significant acquisitions	$	(2,505	)	$	—
Salaries, wages and employee benefits of corporate level employees at Horizon Health		(7,539	)		(1,885	)
	$	(10,044	)	$	(1,885	)

NOTES TO UNAUDITED PRO FORMA
CONDENSED COMBINED INCOME STATEMENTS — (Continued)

(b) Reflects adjustment to professional fees to exclude duplicate costs at the corporate level for the facilities acquired from Horizon Health and those acquired as part of our other non-significant acquisitions.

	Year Ended			Three Months Ended
	December 31, 2006			March 31, 2007
Professional fees at corporate level at non-significant acquisitions	$	(297	)	$	—
Professional fees at corporate level at Horizon Health		(1,857	)		(464	)
	$	(2,154	)	$	(464	)

(c) Reflects adjustments to rentals and leases for reductions of office space at the corporate level for non-
significant acquisitions.

	Year Ended			Three Months Ended
	December 31, 2006			March 31, 2007
Lease expense adjustments for corporate office space reductions at non-significant acquisitions	$	(211	)	$	—

(d) Reflects adjustments to depreciation and amortization expense for purchase accounting adjustments to the basis in property and equipment acquired as part of our non-significant acquisitions and identifiable intangible assets acquired from Horizon Health. Buildings are depreciated over 35 years, equipment over five years and identifiable intangible assets over seven to nine years.

	Year Ended			Three Months Ended
	December 31, 2006			March 31, 2007
Reduction in depreciation and amortization expense on facilities acquired as part of our non-significant acquisitions	$	(2,219	)	$	—
Additional amortization for Horizon Health contracts		2,664			666
	$	445		$	666

(e) Reflects adjustments to eliminate historical interest expense for all debt not assumed from Horizon Health or as part of our non-significant acquisitions and to give effect to interest on the $250,000 aggregate principal amount of notes offered hereby and interest on the additional $225,000 senior secured term loans at LIBOR plus the applicable margin. This adjustment has been offset by a decrease in interest expense related to the pay down of $9,775 on our revolving credit facility and the $38,700 of 105/8% Notes that have been tendered in the Tender Offer. The adjustment also includes amortization on capitalized financing costs and the impact from interest rate swap arrangements. A 1/8% increase (decrease) in our interest rate assumptions would increase (decrease) our interest expense $269 for the year ended December 31, 2006 and $67 for the three months ended March 31, 2007.

NOTES TO UNAUDITED PRO FORMA
CONDENSED COMBINED INCOME STATEMENTS — (Continued)

	Year Ended		Three Months Ended
	December 31, 2006		March 31, 2007
Interest expense for Financing Transactions	$	31,832	$	7,958
Interest expense adjustment for non-significant acquisitions and Horizon Health		8,613		(2,252	)
	$	40,445	$	5,706

(f) Reflects adjustments to eliminate management fees and other related party amounts paid or payable to the sellers prior to acquisition.

	Year Ended			Three Months Ended
	December 31, 2006			March 31, 2007
Management expenses of seller’s corporate office allocated to facilities acquired in our non-significant acquisitions	$	(7,247	)	$	—

(g) Reflects adjustment to revise the provision for income taxes to 37.7% and 38.3% of income from continuing operations before income taxes for the year ended December 31, 2006 and the three months ended March 31, 2007, respectively.

	Year Ended			Three Months Ended
	December 31, 2006			March 31, 2007
Pro forma acquisition income from continuing operations before income taxes	$	49,434		$	36,471
Effective income tax rate		37.7	%		38.3	%
Provision for income taxes		18,656			13,968
Provision prior to pro forma adjustment		11,824			12,418
Pro forma acquisition adjustment to provision for income taxes	$	6,832		$	1,550
Pro forma PSI income from continuing operations before income taxes	$	116,990		$	28,513
Effective income tax rates		37.7	%		38.3	%
Pro forma provision for income taxes		44,152			10,920
Pro forma combined provision for income taxes		56,163			13,968
Financing Transactions pro forma adjustment	$	(12,011	)	$	(3,048	)

(h) Reflects adjustments to give effect to shares issued for certain non-significant acquisitions.