Brent Turner - President Joey A. Jacobs - Chairman & Chief Executive Officer David M. Duckworth - Chief Financial Officer.

Whit Mayo - Robert W. Baird & Co., Inc. (Broker) A. J. Rice - UBS Securities LLC Joanna S. Gajuk - Bank of America Gary Lieberman - Wells Fargo Securities LLC Antonella Paula Torch - Avondale Partners LLC Brian Gil Tanquilut - Jefferies LLC John W. Ransom - Raymond James & Associates, Inc. Frank G. Morgan - RBC Capital Markets LLC Dana R.

Hambly - Stephens, Inc..

Please stand by, we are about to begin. As a reminder, this call is being recorded. Please proceed..

Good morning. I'm Brent Turner, President of Acadia Healthcare, and I'd like to welcome you to our Second Quarter 2015 Conference Call.

To the extent any non-GAAP financial measure is discussed in today's call, you'll also find a reconciliation of that measure to the most directly comparable financial measure calculated according to GAAP on our website by viewing yesterday's news release under the Investors link.

This conference call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements, among others, regarding Acadia's expected quarterly and annual financial performance for 2015 and beyond.

For this purpose, any statements made during this call that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words believes, anticipates, plans, expects, and similar expressions are intended to identify forward-looking statements.

You are hereby cautioned that these statements may be affected by the important factors, among others, set forth in Acadia's filings with the Securities and Exchange Commission, and in the company's second quarter news release, and consequently, actual operations and results may differ materially from the results discussed in the forward-looking statements.

The company undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise. At this time, for opening remarks, I'll now turn the conference over to our Chairman and Chief Executive Officer, Joey Jacobs..

Good morning and welcome to our second quarter conference call. In addition to Brent, I'm here today with our Chief Financial Officer, David Duckworth, and other members of our executive management team. David and I each have some brief remarks about the second quarter and our outlook for Acadia. Then we'll open the line for your questions.

Acadia had a great second quarter of 2015. Our financial results reflect the full quarter impact of both our PiC acquisition completed on July 1 last year, and our CRC acquisition completed February 11 of this year.

Primarily as a result of these transactions, our revenues more than doubled to $450 million for the quarter and our adjusted income from continuing operations increased 138%. We also posted adjusted earnings per diluted share of $0.57, which is an increase of 78% and the fourth consecutive quarter of EPS growth over 50%.

While the PiC and CRC transactions were pivotal to our second quarter growth, our results also reflected nine other acquisitions in the last 12 months ending June 30.

In aggregate, our acquisitions over the one-year period doubled our beds by adding 4,300 beds in 82 inpatient facilities, while also adding 88 comprehensive treatment facilities that serve nearly 46,000 addiction treatment patients per day. We have been especially pleased with our growth in the UK.

In the first year after acquiring PiC, we completed six additional acquisitions in the UK for 22 facilities with over 500 beds. Primarily due to these transactions, PiC operated 45 facilities with over 1,800 beds at the end of the second quarter.

After the end of the quarter, we also are pleased to expand our services in the UK with the acquisition of our first facility in the market focused on addiction treatment. Acadia's organic growth strategy also contributed significantly to our profitable growth for the second quarter.

To meet increasing market demand, we added 500 new beds including one de novo facility in the 12-months ending with the second quarter. We added about 250 of these beds in the first half of 2015. As we mentioned in the first quarter call, we expect to add approximately 400 beds to existing facilities in the U.S.

for full-year 2015, not including the 90-bed de novo facility opened in the first quarter and the 120-bed de novo facility scheduled to open in the third quarter. We also plan to add more than 100 new beds to existing facilities in the UK in the last half of 2015.

Consistent with the business model we've demonstrated over many years, the addition of new beds to our same facility base helped drive 9% growth in same facility revenues for the second quarter.

This strong top line growth generated increased operating leverage primarily responsible for 120-basis-points increase in same facility EBITDA margin to 26.1%. In addition, our consolidated adjusted EBITDA margin rose 240 basis points to 23.3%.

We enter the second half of 2015 with strong operating momentum and ample ongoing acquisition and organic growth opportunities. As a result, we have increased our guidance for our adjusted EPS for 2015 to a range of $2.15 to $2.18, which implies growth of 40% to 42% for 2015 compared with 2014. Thank you for your interest in Acadia.

And now, here's David Duckworth..

Thanks, Joey, and good morning. Acadia's revenue for the second quarter of 2015 was $453.7 million, a 112.2% increase from $213.8 million for the second quarter of 2014. Adjusted income from continuing operations rose 137.8% to $39.5 million from $16.6 million.

Adjusted EPS for the second quarter of 2015 grew 78.1% to $0.57 from $0.32 for the second quarter of 2014. Our adjusted results exclude transaction-related expenses of $7.2 million and $3 million for the second quarters of 2015 and 2014, respectively.

They also exclude a $1 million loss on foreign currency derivatives for the second quarter of 2015 and a $13.7 million gain on foreign currency derivatives for the second quarter last year.

Weighted average diluted shares outstanding increased 32.6% for the comparable quarters, primarily due to our public equity offerings in June 2014 and May 2015, and the February 2015 equity issuance related to the CRC acquisition.

Acadia's tax rate on adjusted income from continuing operations before income taxes was 31.3% for the second quarter, compared with 37.7% for the second quarter of 2014, which is consistent with our expectations of 32% for full-year 2015.

The company produced a 9% increase in same facility revenues for the second quarter, reflecting increases of 7.4% in patient days and 1.5% in revenue per patient day. Same facility EBITDA margin was 26.1%, up 120 basis points from 24.9% for the second quarter last year.

Adjusted consolidated EBITDA rose 136.6% to $105.8 million from $44.7 million, while adjusted consolidated EBITDA margin increased 240 basis points to 23.3% from 20.9%. As discussed in yesterday's news release, we raised our 2015 guidance for adjusted earnings per diluted share to a range of $2.15 to $2.18 from the prior range of $2.11 to $2.15.

Our financial guidance excludes the impact from any future acquisitions and transaction-related expenses. This concludes our prepared remarks this morning and thank you for being with us. I'll now ask Kyle to open the floor for your questions..

Thank you We'll take our first question from Whit Mayo with Robert Baird..

Hey, thanks. Good morning. There's obviously been some momentum building around a new bipartisan mental health bill and some discussion around enhanced or expanded funding for medication-assisted treatment for opioid addiction.

Just curious if you have any thoughts around those two areas?.

Whit, this is Joey. Yes, we are excited and supportive of the legislation that's been introduced both into the House and into the Senate concerning better coverage for mental health and doing away with the IMD, and also about the need to expand for treating opioid additions. And so we're very positive on both of those.

We think the country and the payers and the providers realize the need here in this area and we look forward to working with our senators and congressmen to seeing this legislation move forward. As you know, it's an election year and everything's tougher in an election year, so we'll just keep our fingers crossed.

But it would a very big positive for us, we think, on both of these areas that you addressed..

Okay. And length of stay came down a bit in the quarter; kind of consistent with the trend we've seen presumably just mix.

Just, Brent, (10:10) any color around those moving pieces?.

Whit, this is Joey again. It is – as you've seen our outstanding admission growth, primarily that's acute admissions that's doing that and actually, our length of stay ticked up a little bit from the first quarter. Went from 15.5 I think to 15.6.

So it's just the mix of the acute patients and more of our patients that we're treating today are in the acute side of our business. And as you know, we're focused on buying acute facilities and we focus majority of our expansion capital for new beds on acute beds. So, that's what's making that calculation look like it is..

Okay. And maybe just one last one for maybe David or whoever. But your 12.875% notes are callable later this year. Just didn't know if you had any updated thoughts around that. Thanks..

Yeah, those notes are callable – this is Brent, on November 1 and given that our subsequent three issues are in the sort of average range of 5.5%, I think it's clearly our intention to call those notes and rebase our interest on that roughly $100 million of debt associated with the 12.875%..

Got it. Thanks a lot..

Thanks, Whit..

We'll take our next question from A.J. Rice with UBS..

Hi, everybody. Thanks. First of all, maybe just have you speak specifically to CRC. I think you made the comment broadly that it's running in line to better than expectations.

Can you just break out maybe or comment on some of the things you're seeing that are going particularly well, and if there's any challenges you want to maybe comment on those?.

A.J., this is Joey. CRC acquisition is running ahead of our expectations and we are pleased every day with the results coming from that acquisition. Ron Fincher, our Chief Operating Officer, and his team have done a stunning job in working on the issues that we had identified and I think the occupancy now has gone over 80% for that group of assets.

So, they're growing their census and working on issues. And then the whole team – Ron, Brent, and David, the integration has gone extremely well and the synergies are right on track. So, CRC is turning out to be the transaction that we wanted it to be. And we have two great leaders there, Joe Procopio and John Peloquin, leading the CRC team.

We divided it into two sections and just great. There's a lot of momentum. The employees like being with Acadia and we're seeing that in the results. And once again, they're ahead of expectations and there's more momentum there for growth and performance.

And so, we have absolutely no – we have no issues with this transaction other than they're doing a great job..

And then the UK, I'm thinking the quarter you announced a small deal which gets you into addiction services over there.

Can you just tell us a little bit more about that? Is that sort of a one-off, or do you see a big opportunity in that area over there?.

Well, it's – we asked about it, our operators over there, we've asked them about how is addiction treatment being treated there. There is quite a few facilities that just do addiction treatment and quite a few larger facilities, med/surg facilities that have some addiction services in them. We found this. It's a small facility.

It's less than 20 beds, but we found it. This is a R&D for us that we think the location, the quality of the service there that the previous owner had created, we think we can do well with this. And so it's R&D for us and we think it's going to be a positive. This could be an area where we would consolidate and grow further in the UK..

Okay. And then just finally last one. Just hear you thoughts on any update on the competitive landscape. You're obviously looking at several different geographies as well as types of services that you're willing to buy.

Is there any change or development either with respect to the prices you're seeing that you have to pay or the competitive landscape for deals?.

The prices are competitive. We still find the transaction where we're the only one there. The Belmont facility that we bought in the third quarter, we were the only one doing that transaction. We're the only one that was involved with Southcoast doing that transaction.

But many of the transactions we see now are coming to us from bankers, and – but it's different. We are seeing different – there's not someone like Acadia always there at the table. It's different groups, smaller groups of individuals looking at the facility that have an interest in those facilities that we might be acquiring.

Once again, our balance sheet, our history, both with our former company and with Acadia and – gives us a heads up. And Steve Davidson, our Chief Development Officer, during the past 90 days, he's worked me very hard; had me out on the road, visiting potential acquisitions for us.

So, we're very busy sorting through the acquisitions, and we're going to continue to make good, accretive acquisitions for Acadia and the pipeline is busy. And Steve is keeping me busy, so we think we will have more acquisitions in the last half of 2015..

Okay. Great. Thanks a lot..

Our next question comes from Kevin Fischbeck with Bank of America Merrill Lynch..

Good morning. This is Joanna Gajuk filling in for Kevin today. So, just a question on – I guess, you start talking about the, sort of the policy or the different policies there being discussed there.

But can you just talk about what you see in terms of the Mental Health Parity impact or anything around coverage expansion? So, any trends to kind of highlight there?.

Sure, Joanna. I think on parity, obviously last year, the final regs went into place for plan years post July 1, 2014. I think it's just going to be a continuation of adoption of Mental Health Parity.

Obviously, there's more access to the patients that have the insurance and more appropriate coverage levels, but we're going to continue to see – the whole industry will continue to see incremental benefits as payers and providers get more accustomed to behaving within the rules of Mental Health Parity.

And then, on the IMD, or the Medicaid exemption, there's a lot of momentum there with the CMS announcement under the managed Medicaid regs for the managed Medicaid states to be able to cover Medicaid adults in free-standing psychiatric facilities.

That, coupled with the legislation that's being – has already been introduced in the House and is expected to be introduced in the Senate that would most likely address the IMD exclusion overall. We feel very good about the opportunity for that issue to be resolved in the near future..

Great. And then, I've noticed the operating cash flow was very strong. I recall on the first quarter call you were saying that the Q1 was weak (18:42) but then you expect, well, $50 million in Q2, but it came much – even stronger than what you were, kind of, calling it will be.

So, any highlights there?.

Yeah, Joanna, this is David. It was a great quarter of operating cash flows. The results from same facility and recent acquisitions are a big driver of that being ahead of our expectations. We also see the tax benefit around some of the deal structuring that we've done, add to that operating cash flow number for the quarter.

And we think it'll continue at the second quarter level for the rest of the year..

All right. And then, I'm not sure if I missed it, but did you talk about your plans for bed additions for this year in the UK and the U.S., the breakdown of things in terms of bed additions? And then I guess maybe if there's any initial view of next year..

Well, we haven't given out next year's targets, but the list of projects that have already been approved for next year that we're working on is going to look similar to what we're going to do this year. This year, I think, we've set the target of doing more than 400 same-store beds here in the U.S. and more than 100 over in the UK.

And then we have two de novo projects here in the U.S. this year, which are going to add 210 beds this year. So, we're right at, slightly ahead of what we're going to be doing this year, our goals there and then it looks like 2016 is going to look a lot like 2015..

And then just lastly on the, I guess, the color around – of you not really seeing any major competitor looking at the same deals as you do, but I guess there is one publicly traded company that's doing that or concentrated on the addiction center business.

So, are you competing with them for the deals? Are you seeing any other sort of companies growing in like the specialty sort of sector there that could be potential, I guess, competitor in terms of consolidation on that front? Thanks..

There are small private efforts out there about creating companies. The other publicly traded company, we've never competed with them on any transaction that I'm aware of. So, we are looking more for the Sierra Tucson, Bayside Marin, our Blue Ridge facility in Georgia.

Ours is a different type of facility that we're looking at, so we've not had them as a competitor..

Okay. Thank you..

We'll take our next question from Gary Lieberman with Wells Fargo..

Good morning. Thanks for taking the question.

Can you give us any guidance or maybe some thoughts on how to frame or potentially frame the IMD exclusion benefit as we go forward?.

We're all looking at each other, Gary, about who wants to answer this. It's going to be big, but I think we will start seeing it – as Brent mentioned earlier, we've already seen some of it through the managed Medicaid. We will see it through more as more and more states do the managed Medicaid and the Medicaid adult can come to us.

There has been some people out there that have tried to estimate it. We do not spend a lot of time. We just want to know that we have learned how to build and add beds, and we always start our bed projects before we absolutely need them.

So, if there was to be a greater influx of patients because of IMD or the managed Medicaid, we could handle that until we build enough beds to correct the imbalance there temporarily. So, I think we could handle it for six months with our capacity and catch up quickly on building additional beds to handle this. But it could be big..

Okay. I kind of figured it would be big, are there any numbers that we could sort of put around that? Any examples of facilities that you've seen a change and that you could even directionally sort of help us model that? (23:33).

No. Gary, we don't – no, we don't have that available, that data available..

Okay. And then maybe just turning onto the UK. It sounds like you're still very bullish there.

Any updates on reimbursement or any language from NHS in terms of how they're feeling about the business and the privatization of the business?.

The NHS is very, very happy with our operations there and the facilities that we have added during the past 12 months to complement the PiC transaction. Rate talk won't begin until, I think, probably February. It has an April 1, I think, effective date over there. So, it's too early for any rate talk right now.

But the NHS, it appears we have a very good relationship with them and that they work with us on where their needs are, and so very strong relationship with NHS..

Okay. Great. Thanks very much..

We'll take our next question from Paula Torch with Avondale Partners..

Thank you. Good morning. Thanks for taking my question. I had some follow-ups on a couple of questions that have already been answered.

I'm wondering how difficult it is to open new CTCs and what's the regulatory environment like in CON states and the non-CON states and do you see any challenges to growth there? And just as a follow-up, is there better chance for acquisitions in this business or still opportunities to grow organically here?.

No. We will grow both ways. We will make some acquisitions in this area, but also I think we're doing five de novos this year. Hopefully, we can up that number to high single digits next year for de novo opportunities. So, John Peloquin and his team are all over this about the de novos. So, we will be doing both.

States have different licensing and approval process about getting these licenses to do a de novo, but John and his team know that. Just like we do on the acute side, we know certain states have CON, some of them don't, the licensing.

So, we have a pretty good handle on how to get the licenses and the approvals that we need to start the de novo projects for the CTC centers, so we're very bullish here as we are with the UK and we will be making acquisitions and doing de novos here, too..

Okay. Great. Thank you. And in the UK, I know that it's small and that it's an R&D, but how big is the addiction market, Joey, and what is the approach to substance use disorders in the UK versus the U.S.? Is it treated differently? And is it all private pay? What's the reimbursement like? Maybe just a little bit more color there..

Okay. Now, you're testing my knowledge or my memory here. It is more private pay, but NHS does pay. It is – length of stay, it's similar to what we have here in the States, and there is a larger number of opportunities there in this area than I thought.

We've just done a little homework on the UK and did an inventory of who's doing it, who's not doing it. And I was surprised when I saw the report, the number of opportunities that might be available for us for acquisitions.

So, it's – but once again, we're starting with this one facility and see how we do with it and then we'll take it a step at a time..

Okay. And then maybe one last one from me. I just want to switch to margins for a second. Certainly very strong in the U.S.; wondering if most of that is from CRC.

And then as we think about UK margins, they were down a little bit more significantly sequentially than we expected and is that just due to ramping of the businesses there? I think we saw that in first quarter.

Just wondering if there's anything else you can call out on margins and when we should expect the UK to pick back up to the 26%, 27% range?.

The UK is most definitely the de novo beds, the same store beds that we're adding, and some of our smaller acquisitions where we're taking those over. (28:15) Those are more of a turnaround where they were not running the same margin as PiC was running, so that gives us more upside.

If we're successful in continuing to make acquisitions and significant acquisitions in the UK, it's going to be a while before that margin gets back to the old levels because we're going to be growing and getting more margin improvements from the facilities that we're acquiring.

So, we're very pleased with them and it is just the waiting of the new acquisitions that we have made there. And so, Joy Chamberlain and her group is doing a great job there.

The margins here back in the U.S., CRC's margins are very good, but the same-store patient day growth, the 9% revenue growth there, Ron and his team did a great job there; so, it's a combination of both. But CRC margins as we expected are good, strong, and as I mentioned earlier, we're now over 80% occupancy in that group of assets.

And so, when that happens, margins improve..

Yeah. It's a great number. So, thank you very much for taking the questions..

We'll take our next question from Brian Tanquilut with Jefferies..

Hey. Good morning, guys. Congratulations. Joey, I know earlier, or toward the end of the second quarter, you formally guided to the doubling of the revenue outlook for the next three years.

So, if you don't mind just sharing with us how you view the drivers of that? Meaning, what percentage would be organic and how you view the M&A component to get to that doubling of the revenue run rate?.

If you were to take just $2 billion, which we'd need to add to our existing $2 billion to get the $4 billion run rate, I think by the end of 2018, what you need to do – what we did when we did this, $600 million to $700 million we believe is going to come from organic revenue and then that leaves about $1.3 billion that Steve will acquire and find for us over the next three years.

So, it's about $400 million – $300 million to $400 million a year in acquisition revenue. However, there are a handful of larger transactions that we could do that makes this much easier, and so we do spend time working those transactions. So, that's how we get there..

Got it. Okay. And then in the UK, you've obviously been very active on the M&A front, even outside of addiction. How do you see the pipeline there in terms of the size of the deals? And I know that – I think it's a more consolidated market than the U.S. is.

Are there a lot more of these multi-facility assets that are up for sale right now or at least you think will come up for sale in the next 12 months? Should we think of the deal flow being skewed to the UK versus the U.S.?.

Nope, it's going to be similar in both places. There are several multi-facility transactions that we can do in the UK, and I expect in the next 24 months we will do one or two of those..

Okay..

So, in the U.K. we will continue to grow..

Got it. And then just for David, your comment on free cash flow. So, is that a good – I know you said for the rest of the year that looks good.

So going forward, is there anything structural that would change your free cash flow profile as we – and I know you're not giving guidance for 2016, but just conceptually, how should we think about free cash flow beyond 2015?.

Yeah, I mean, Brian, I think what we've seen is that the first quarter and working capital needs there tend to pull just that quarter down a little bit. And then historically, we've seen de novos have an impact, but I would say as we continue to do de novos at a consolidated level, the effect of that won't be as significant as it's been in the past.

So, I think the cash flow number will continue to be strong outside of maybe a slightly lower number in the first quarter..

All right. Got it. Thanks, guys. Congratulations again..

Thanks..

We will take our next question from John Ransom with Raymond James..

I need to learn to hit the *1 faster because all the smart questions have been asked. I just....

John, that means you need to come in first all the time. If you're second, you've already lost..

I believe that's a Ricky Bobby quote, right?.

Good morning..

First loser.

Remind me or remind us how much of the UK market is private versus government owned and what you think the step down might be in terms of the government turning more and more over to the private sector?.

John, it's roughly – just progressionally from the last update, which has probably been 2013 data, I would estimate it's about 15% of the overall mental health services are in the independent sector, and then leaving 85% run by the NHS.

Everything that we hear and sort of are experiencing just reflects, if you will, an acceleration of some of the NHS movement toward relying on independent sector for the care, certainly in the intermediate time period. So, we don't see that slowing down by any means..

And so every, say, 10% they step down, NHS steps down, what roughly is the size of that opportunity?.

It's about a $20 billion, U.S. dollar market. So, that would be roughly about $2 billion of revenue opportunity for the independent sector..

And that does not include addiction.

That's just what – that's what the Partners in Care was doing?.

Correct..

Okay.

And do you have any idea of those stats on addiction?.

I do not have that in front of me, John..

Is the government involved in providing that care? Or is that....

No. I'm sure they provide some, but it looks like that is, once again, a private side business opportunity. NHS is a payer, but it looks like there's more private side opportunity there..

And then just my last question would be looking at the U.S. addiction market, which is very large and very unconsolidated.

As you assess the market, how many multi-site acquisitions that fit your standards and can be had for a reasonable price, what does that look like? And is there a bid/ask spread going on between what you want to pay and what these multi-sites are looking to get?.

Well, obviously they always think their facility is the best in the world, and we will go through our evaluation and give them a fair price. So there is that give and take there. There are, just off the top of my head, I'd say 10-plus multi-facility opportunities out there. So – and we are looking at some of those, and so – but there's more than 10..

Okay. And as I recall, when you bought CRC, they had 600-plus empty beds. I know you had filled around 100 I think of those by the first quarter.

Where does their occupancy stand today compared to when you acquired it?.

I don't have the occupancy numbers, but I can tell you on the number of beds, I think there was roughly closer to 700 empty beds and I think we're now down to about 450, somewhere in that area..

Great. Thank you..

We'll take our next question from Frank Morgan with RBC Capital Markets..

Any thoughts on the psych final rule that came out the other day? Anything in particular that stood out to you as meaningful or notable?.

It was as expected, Frank. Obviously, the original notice came out 60 days ago. Generally, it wrapped just inside of a 2% rate increase for the providers. And so, it was just the finalization of that initial update, and it was as expected..

Okay. But nothing structurally different either..

No. No. It was literally just a update of the rate..

Okay. No, that's fine. And then one final one. I think you all mentioned tax advantage deal structures that helped your tax rate. Could you maybe elaborate just briefly on that? And that's got it. (37:44) Thanks..

Yeah. Sure, Frank. This is David. What we've seen is really a combination of two things that are acquisition related that have helped make our cash tax rate around 20% to 22% compared to what we see on a GAAP tax rate of around 32%. But what we see is the value of NOLs that we sometimes acquire in a transaction.

Notably for this quarter, the CRC transaction brought some NOLs that we've been able to utilize and will utilize for about a three-year period. And then in certain deals, we also are able to structure the deal to get some deductible good will for tax purposes.

We don't see that in our GAAP tax rate, but there are tax deductions from that, that improve our operating cash flows..

Okay. Thanks..

We will take our next question from Dana Hambly with Stephens..

Thank you. Joey, on the acquisitions, just thinking about the different segments, obviously the UK is a big opportunity; the addiction, big opportunity. But maybe I'm wrong, I'm hearing less on the acute inpatient.

Are you not seeing the same quality or the same size on that portfolio?.

No. No..

Okay..

No. Let me clean that up. We are looking at terrific acute facilities in the U.S..

Okay..

And from stand-alones to multi-facility..

Okay. Very good. I misunderstood. And then on the – looking at the non-same-store margins, you've been running north of 30% the last couple of quarters, obviously a lot of CRC. I had thought – you had talked about those margins being more like in the mid-20%s, so of course you're performing above expectations.

Is that something, though, that could actually go higher if you can get the occupancy up?.

Well, we have seen that as – a higher occupancy you run, the margins do improve. So – but once again, you have to achieve that higher occupancy and we're constantly building and adding beds.

So, if we were to just stop and just focus on occupancy and just driving it, that would be a short-term and margin may go up some, but we want to build our beds and grow our total revenues from those new patient days. So – but, our margins are good..

Yes, they are. Thank you very much.

Thanks..

And we have no further questions in queue at this time. I would now like to turn the conference back over to Joey Jacobs for any additional or closing remarks..

Sure, I must give out a thanks to all our 20,000-plus employees and clinicians that work at our facilities. Thank you, all, very much every – for what you do every day and the number of patients that we take care of and you all are what's making Acadia very, very, very successful.

To Ron and his team on the stunning performance they gave us in the second quarter. I did happen to visit three facilities. I went out to Desert Hills. Carol Bickelman, our CEO there, we cut the ribbon on a brand new replacement facility there for her and her team. Just outstanding work she's doing.

Bill Parsons up at Southcoast in Massachusetts, which we're going through the process right now of opening that new 120-bed facility. To Bill and his team and our Southcoast partners just going terrific there. And to Dr.

Kim Dennis, our CEO of Timberline Knolls up in Chicago, she happened to come down last week and present to our board and we were up visiting with her about a month ago, just a great job she continues to do that and what that facility does for its many, many, many patients. So, once again, thank you all very much.

Thank you for being on the call with us today and we'll talk to you at the end of the third quarter..

And this does conclude today's conference call. Thank you, all, for your participation. You may now disconnect..