Brent Turner - President Joey Jacobs - Chairman & CEO David Duckworth - CFO.

Whit Mayo - Robert W.

Baird Kevin Fischbeck - Bank of America Paula Torch - Avondale Partners Gary Lieberman - Wells Fargo Ana Gupte - Leerink Partners AJ Rice - UBS Frank Morgan - RBC Capital Markets Brian Tanquilut - Jefferies Chris Rigg - Susquehanna Financial Group Gary Taylor - JP Morgan Charles Haff - Craig Hallum John Ransom - Raymond James Dana Hambly - Stephens Financial.

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

Good morning. I'm Brent Turner, President of Acadia Healthcare, and I'd like to welcome you to our Fourth 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 2016 and beyond.

For this purpose, any statements made during the call that are not statement of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words believes, anticipate, 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 fourth 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'd like to turn the conference over to our Chairman and Chief Executive Officer, Joey Jacobs..

Good morning and welcome to our fourth 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, Brent and I each have some brief remarks about the fourth quarter and our outlook for Acadia. Then we'll open the line for your questions.

Acadia continues to produce strong operating results with substantial profitable growth for both the fourth quarter and the full year of 2015.

Having started 2015 with approximately 5,800 beds in 78 facilities in 24 states, the United Kingdom and Puerto Rico, we completed 2015 with more than 9,900 beds in 258 facilities while adding 50 new states to our U.S. geographic coverage.

This very significant expansion during a period of increasing demand was the key contributor to our 68% growth in revenues and adjusted EBITDA for the fourth quarter. It also drove the 28% growth in our adjusted EPS for the quarter which includes the impacts of new shares issued during the year, primarily related to acquisitions.

2015 is our fifth consecutive year of very strong profitable growth, which we attribute to the outstanding execution of our acquisition and growth -- organic growth strategy. During 2015, we made 17 acquisitions for 69 inpatient facilities with approximately 3,450 beds and for 107 Comprehensive Treatment Centers.

Five of these transactions were completed in the fourth quarter with approximately 200 beds and 19 CTC centers. We have already gotten off to a great start in 2016 by announcing the completion of the Priory acquisition in our news release yesterday afternoon. Priory is a high quality, independent behavioral health provider in the U.K.

with a great reputation for clinical expertise and excellent facilities. It's also the U.K.'s largest independent provider with 327 facilities and approximately 7,100 inpatient beds. Combining this network with our existing U.K. presence, increases in Acadia's footprint there are 381 inpatient facilities with approximately 9,300 beds.

This acquisition also expands our company-wide operations to a total of 585 behavioral health facilities with approximately 17,100 inpatient beds.

The combination of Priory's annual revenue of over $850 million with our revenue running at an annualized pace during the fourth quarter of $2 billion, represents a major step forward to achieve annual revenue of $3 billion.

The growth in our fourth quarter revenue further reflects the significant contribution of our organic growth strategy through our overall results. A central element of this strategy is to meet rising demand in the U.S. and the U.K. primarily by adding beds to existing facilities and by opening de novo facility.

For 2015, we added approximately 670 beds, a 16% increase in total beds for the year. During the fourth quarter alone, we added 149 beds to existing facilities and we are on track to add more than 300 beds in the first quarter of 2016. For the full year 2016, we expect to have more than 800 bed additions system-wide.

The addition of new beds to our same facility base was the primary driver of an 8% increase in same facility revenue for the fourth quarter, which reflects a nice improvement compared to the third quarter of 6.5% same facility revenue growth.

Consolidated EBITDA increased 68.4% to $111.8 million for the quarter and the margin raised 10 basis points to 22.6%. With a strong finish to 2015 and significant acquisition activity already accomplished for 2016, we expect our operating momentum to continue.

Accordingly today, we established our adjusted earnings guidance for 2016 in a range of $2.81 to $2.86 per diluted share, which implies an increase of 26% to 28% for the year compared with 2015. I now believe we can achieve a $6 billion revenue run rate by the fourth quarter of 2020.

Thank you for your interest in Acadia, and now, I'll turn it over to David Duckworth. .

Thanks, Joey and good morning. Acadia's revenue for the fourth quarter of 2015 increased 68% to $495.3 million from $294.9 million in the fourth quarter of 2014. Adjusted income from continuing operations attributable to Acadia was $42.3 million, up 55.8% from $27.2 million.

Adjusted EPS for the fourth quarter of 2015 was $0.59, up 28.3% from $0.46 for the fourth quarter of 2014. For full year 2015, revenue increased 78.6% to $1.8 billion. Adjusted income from continuing operations attributable to Acadia rose 79% to $152.8 million, and adjusted EPS increased 44.8% to $2.23.

For the fourth quarter of 2015, our adjusted EPS excludes debt extinguishment cost of $839,000 in transaction-related expenses of $5.2 million. For the fourth quarter for 2014, adjusted EPS excludes transaction-related expenses of $2.8 million.

Weighted average diluted shares outstanding increased 19.5% to the comparable quarters, primarily due to the equity issued in conjunction with the CRC acquisition in February 2015 and for a public equity offering in May 2015.

Acadia's tax rate on an adjusted income from continuing operations before income taxes was 28.5% for the fourth quarter compared with 27.9% for the fourth quarter of 2014.

Acadia's same facility revenue increased 8% for the fourth quarter compared with the fourth quarter of 2014 with 7.8% growth in patient days and 0.1% increase in revenue per patient day. Same facility EBITDA margin was 25.5% for the latest quarter versus 25.7% for the fourth quarter of the prior year.

Adjusted consolidated EBITDA grew 68.4% to $111.8 million which was 22.6% of consolidated revenue from $63.4 million or 25% of consolidated revenue last year. As announced in yesterday's news release, we established our 2016 guidance for adjusted earnings per diluted share in a range of $2.81 to $2.86, an increase of 26% to 28% over 2015.

We also established first quarter guidance for adjusted EPS in a range of $0.53 to $0.54, an increase of $0.23 to $0.26 over the first quarter of '15.

Our first quarter guidance includes the impact of the January 12th closing of an 11.5 million share of public equity offering of our common stock related to the Priory acquisition and 4 million shares issued to the Priory shareholders at the closing of the transaction yesterday.

The first quarter also reflects only a partial quarter of the accretive impact of the transaction. Other assumptions included in our financial guidance including exchange rate of $1.45 per British Pound Sterling, non-cash stock compensation expense of approximately $26 million, and a consolidated tax rate of 23%.

Our guidance excludes the impact from any future acquisition or transaction-related expenses. Now here is Brent. .

Thank you, David.

Before we turn the call over to the operator to queue up the questions, we had a number of questions around our guidance and while David's outlined some of the components, I thought it would be very helpful and may be alleviate a lot of redundant question to outline somewhat of a bridge or reconciliation to our 2016 guidance compared to more of the run rate for a full year.

So when you look at our mid-point of approximately $2.84 for our 2016 adjusted EPS, there are several items that it's important to note and really adjust for.

First, the early January 2016 equity offering of 11.5 million shares to finance a portion of the Priory transaction had a negative carry impact on the company's earnings for 2016 of about $0.04 and the $0.04 impact from that 35-day carry of that offering.

Two, Priory closing in mid-February only affords us a partial period effect in 2016 of approximately 10.5 month. And so when you adjust for that partial period, the impact is about another $0.04 per share.

Third, the strengthening dollar has had an effect on both our outlook for PiC and Priory earnings in 2016 due to the exchange rate from $1.52, roughly, where the exchange rate was in 2015 to our estimate and where the exchange rate is currently in the neighborhood of $1.45 for 2016. That effect is another $0.10 on the earnings of outlook.

And then lastly, our assumed cost efficiencies are impacted again by the partial period for Priory in 2016, as well as a more conservative approach to the timing in realizing some of these efficiencies. We expect to be on a run rate of $20 million in savings by the fourth quarter of 2016.

This more conservative adjustment is about $0.11 impact in 2016. So these adjustments bring our pro forma adjusted EPS to approximately $3.14 and then if you take out and don't adjust for the FX because that is out of the company's control, it's still north of $3 when you adjust for the full year effect of these other three items.

So I did think that was helpful to just frame the absolute numbers embedded in our outlook. And at this point, operator, you can now begin the questions. .

Thank you. [Operator Instructions] And we'll take our first question from Whit Mayo with Robert W. Baird..

Hey, thanks.

Maybe just follow-up on your last comment Brent, around the synergies, just trying to figure out was there a new development that occurred to reshape your thinking around the pace and timing of the synergies, just trying to understand a little bit more where this new conservative stance comes from? And has your view on the overall accretion really changed? I understand that a lot of this is just timing related issues..

Whit, this is Joey. It's all timing related, we are still absolutely certain that the cost efficiencies will be able to get to $20 million and we were just somewhat conservative in our 2016 guidance, but you can be rest assured that it is a top priority of our operations team and myself.

So, we will get those, as Brent mentioned, we'll get those cost efficiencies as soon as possible and deliver those earnings to the market..

Okay. I guess I'm just trying to understand that you feel like initially that was a synergy number that you could realize for all of 2016 and something occurred to make you -- okay..

No, nothing occurred, no. It was just -- probably too much conservatism on my part..

Okay. No, that's fair. And second question just may be around the recently issued proposed rule for TRICARE, and I know that you've got a number of dedicated military TRICARE facilities today.

Just curious if you have any thoughts, if you think this is helpful to the facilities where you aren't a TRICARE provider or potentially a headwind for some of your existing dedicated military programs? Thanks..

Actually we think it's a tailwind, what we don't talk a lot about is we do have a National Marketing Referral Department that TRICARE is a large part of that. So actually the opportunity and the additional coverage, we see that as a positive for us.

And once again, its further confirmation that once we recognize that addiction and mental health issues that the coverage is there for those individuals..

Great. Thanks. .

And we'll go to our next question from Kevin Fischbeck with Bank of America..

Great. Thanks.

Again, just to clarify, the synergy number or the accretion number that you expect from Priory, that hasn't changed at all and that's assuming stable exchange rates, I guess that might be the only thing that way and FX [ph]?.

The only thing -- that's right Kevin, the only thing really is the FX, everything else is absolutely what we've said, absolutely.

Now what -- I'm very -- I'm absolutely excited about is that we were able to make this acquisitions during the toughest -- one of the toughest times in the market and we're able to access all pieces of the balance sheet to make that acquisition happen.

And absolutely the accretion, the assumptions we have for that other than the foreign currency exchange, everything is else -- we're very, very optimistic and welcome those 13,000 employees to the Acadia family and very, very excited about getting this deal done on February 16..

Okay. As far as the new bed additions that you've been doing, I think in the last quarter at Q3 you kind of said the organic growth rate was pulled back a little bit just so you couldn't open that fast enough. I think in Q4 you were looking to do more beds than you actually you were hoping for 700 plus in 2015, you did 670.

Is there anything around your ability to open beds -- something that is earlier this year but anything going on there around bed approvals or timing or anything that we should be thinking about?.

There is nothing at all, and quite frankly, our folks were out in Las Vegas this past week opening up a brand new 40 bed unit to that facility. And as we've mentioned, we're going to do more than 300 beds.

Now obviously, the third quarter, lot of -- we got a lot of concern about the third quarter, the same-store revenue numbers, but as we talked about it on the call, it was just a delay of the bed, beds came online and we started filling those up. So you saw us grow up 150 basis points on the same facility revenues in 6.5% to 8%.

So up 150 basis points in that one quarter, Ron Fincher and the operations team did an outstanding job. So, once again we're looking for strong single digit same-store revenue growth for 2016..

And then just one clarification on the organic growth rate, your $6 million in revenue run rate is that kind of assuming a high single digit growth rate until something of that comes in for [ph] deals?.

Using the model, I would use 8%..

Okay, perfect. Thank you. .

Thank you..

And we'll go to our next question from Paula Torch with Avondale Partners..

Great. Thanks and good morning. I have a couple of questions on the U.K.

I'm wondering the growth rate for Priory, is it consistent with Partnerships in Care and is relatively in line with your consolidated organic growth rate? And may be how we should think about that going forward any kind of Forex impact?.

We expect them to have strong single digit patient day growth. They have -- the last time I talked to Tom Riall, the CEO of Priory, they have 300 beds that they need to get work on. So, they've got the same demand needs as Partnerships in Care does. And so we expect another good year out of the U.K. both, for Priory and for PiC..

Okay. And just in terms of may be getting a little bit more color on your overall M&A pipeline. I mean, I think over 40% or so now of your revenues is coming from the U.K. and in the past you stated that your core U.S. mental health business would really make up the bulk.

So, is that changing? How we should think about the breakdown over the next couple of years and wondering how the pipeline looks in the U.S.

for core mental health?.

Okay, for the remainder of the year, I see very little acquisition activity in the U.K. but I do see acquisition activity, one-off transactions here in the U.S. which would be in our core spot. We are in the beginning stages of discussions with larger transactions that probably would occur in 2017.

So we were pivoting back and the opportunity on the acquisition front for the next 18 months will be here in the U.S. So the U.S's revenue and earnings as a percent of the total will grow..

Okay, great. And just one last follow-up on Priory if I may, I think if my numbers are correct, it has about 200 basis points less margin than PiC.

So just curious what's driving that difference? And is there any opportunity to pick up margins there as well or is it just may be inherent in some of the service lines that Priory may have that PiC doesn't?.

Once you achieve the cost efficiency, their margins are going to be very similar to PiC. So -- and then, I think during the period of 2012 to 2014, they did some infrastructure work expense on some quality initiatives that they wanted to do for their company which they have those completed. So that spend would lessen going forward.

So between the cost efficiencies -- and that's been slowing down the margins should be similar to what we have with PiC..

Okay, thank you so much..

And we'll take the next question from Gary Lieberman with Wells Fargo..

Good morning. Thanks for taking the question. Maybe you talk about the balance sheet and how you're thinking about acquisitions and financing and leverage ratios..

We're -- our highlight mark, it was on February 16 at 5.4, we expect that to come down during the year. We have $300 million roughly available under the revolver. So for the one-off transactions, we have adequate capacity there. So Gary, we'll be able to continue to make acquisitions here in the U.S.

using the revolver and at the same time, growing our earnings and lowering our leverage hopefully, I have a personal goal getting close to 5X by the end of the year..

Okay.

And then so, you feel good about whatever is there in the pipeline the larger stuff for 2017 if there shouldn't be any obstacles to financing any of that?.

No..

Okay. All right. Thanks very much. .

Thanks, Gary. .

We'll go to our next question from Ana Gupte with Leerink Partners. .

Yes, thanks. Good morning, I appreciate you taking the questions. About the same store growth, one of your peers talked about staffing shortages that did not help volumes.

So beyond the build out and the timing of your capacity in the bed, have you had any issues around that and if not, what sort of makes it different for you?.

In the U.S. we've not seen that be a significant issue at all, about it being able to build our bed, open our bed and staff our bed. So maybe it's just the markets that we're in but we've been able to find the staff necessary to grow as you saw with the fourth quarter put up great, same-store growth numbers.

So we see that continuing and hopefully we don't have any of those issues happen with us..

Okay, great. And then on the U.K. again on the same-store side but for pricing, there was a little bit of pressure you said that would ease up.

Now that you have the PiC and Priory and really a significant player to what degree are you able to influence the reimbursement environment with NHS and do you expect it to be kind of flattish still or might get better than that?.

Since we just brought on February 16 and negotiations with NHS are about to be completed, we think both companies will -- should be able to get more than a 1% increase in their rate. And those negotiations will be completed by April 1.

So both of them are working separate tracks and there is no reason to -- we will let them continue and finish those negotiations and it is going to be a positive rate increase..

And what would be the timing of the increase with the April 1 negotiation?.

April 1..

Okay, terrific. Thank you. .

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

Hello, everybody. May be first on Priory, obviously beyond this traditional acute psychiatric care, they have a number of business lines.

Can you just comment a little bit more where you see opportunities and may be some of those other business lines that might be interesting long-term for you or even more broadly across the Acadia portfolio? And then is there anything in that portfolio that you know is probably a candidate for divestiture?.

The book of business that Priory has fits us nicely and we like it all. The one piece of their business is the nursing home fees that we would not have done but they did it several years ago.

AJ, somewhere down the road that's a possibility of divesting that but right now, and right now when I say that I say for the next 24 months, we'll just continue to operate if we like the pieces of the business and just try to be as efficient in the delivery of high quality service over there knowing that this one subsidiary really doesn't see it what we do..

And I think they have some stuff and with the development of stable, artistic and those kind of things, are those niche business at their end or are those that you might see potential to expand more broadly across the Acadia portfolio?.

We do that business now here in the U.S. and it is a possibility for growth for us, but it would be more complementary to our existing businesses. Now if we came across a free standing facility that we really liked in this area, we would give it a hard look, because that is a need that needs to be met and we do have this experience in the U.K.

about running those types of businesses, so that could be an opportunity for us here AJ in the U.S..

Okay, and may be just one other pivot, any update in your thinking about where we stand with respect to the I&D [ph] exclusion or other legislative initiatives that are percolating in --.

Sure, AJ, this is Brent. We're -- continue to be optimistic to how has the Tim Murphy bill and the Energy & Commerce committee is expected to go to the full committee in I believe early April. Similarly the senator Chris Murphy on the senate side has begun making its way through the health committee.

So we're very optimistic that there's movement in both houses, both these bills, obviously there's some reconciliation of their respective bills to come together.

But we are continuing to push very hard and we believe that there is a lot of support to take away this inequality that limits the Medicaid adults to being able to get treated in -- psychiatric hospitals in our country..

Okay. Thanks a lot. .

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

Good morning. I think at some point in your prepared remarks you mentioned some investments that were being made in the U.K. and it made me think about you in a larger scale.

With all the acquisitions including Priory, do you feel like you've got sufficient sort of corporate infrastructure, if you will, to manage all of the growth? How do you feel on that front at the corporate level?.

Yes, we have a lot of corporate town over there that's more than adequate to run our U.K. operations and we have total -- we have great confidence in our abilities. So that's not – I don't see that being an issue. .

And what about here in the U.S.

sales, how do you feel your position there?.

Oh, we have a great team here in the U.S. I will say this. We're just anniversarying the CRC transaction and it exceeded all expectations during the past year and key reason to that is how Ron organized that into subsidiaries, to divisions. And both Jon Peloquin and Joe Procopio have done an outstanding job.

And so, Ron Fincher has both here and the U.K. has great talent positions to continue to get the results that we need. .

Gotcha. And I guess just sort of nip-tick [ph] on the margins, same store margins here in the U.S. a little bit minor 20 basis point compression there. Is that just more function of may be the rate environment or is it anything you're seeing on the cost side? And I'll hop off, thanks. .

It was just slightly down, Frank. There was nothing -- I saw nothing unusual in that. It was just basically on top of each other, 20 basis points and year-to-date it's up, so we were very pleased. We were extremely pleased with the same store revenue coming back.

That had concerned some people and we said just be patient we were late in getting some of those beds opened and the beds opened. So, there's probably a little ramp up cost may be in some of those same store beds that may be impacted that margins slightly. .

Okay. Thank you very much. Oh, one other, going forward, will you all be reporting having like a constant currency reporting mechanism inside of your operating results now that you've got such a big presence over there? And I'll hop off, thanks. .

Frank, this is Brent. We do that within the same facility results for the U.K. So in terms of measuring how the assets are doing in the U.K., it's only fair to hold the currency constant and pointing to that on our page seven of the release, you see that U.K. same facility revenue was up 9.2% in the third quarter.

So the PiC asset performing very well both in the third and fourth quarter on a year-over-year basis anniversary. Thanks. .

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

Hey, good morning guys. Brent or Joey, we just saw that the British Prime Minister announced £ 1 billion for your commitment to mental health.

So how do the assets that you have them there? How do they position to take advantage of increasing spend from NHS in terms of whether it's new capabilities or new build outs, and how should we be thinking about that?.

Brian, that's great new and I think the most obvious thing is that Priory is by far the most recognizable provider of mental health in the U.K. I think the stats say 63 plus percent of the folks in the recognize that.

So there's more dollars, more access, we would think that our portfolio is well positioned to meet that need in the country, similar to some of the tailwinds we're enjoying in the U.S. from legislation and regulatory adjustments to provide more access. .

And Brent, to follow up on that, do we need to ration up CapEx as they spend more money outside of the core NHS facilities?.

We don't see any necessarily significant increase in CapEx, but to the extent that that opportunity presents itself, that's just a return on capital assessment and say does it make sense? But similar to the U.S., we've got capacity in the system there to absorb some further increases and utilizations before we would have to step-up incrementally the CapEx spend beyond what we have budgeted before 2016.

Got it.

And then my follow up question, just on the M&A Joey, here in the U.S., the M&A outlook and environment, are we seeing valuations come down yet? And what is the competitive landscape like for deals at this point?.

Valuations are coming down and there still is -- there's still quite a bit of activity about one-off facilities, these boutique bankers getting in the process, but that's not an issue. If we don't like, we're not buying it. And if we can't buy that for our price, we're not buying it. So multiples are coming down and so, that's how we see the U.S.

market today. .

Got it. Thanks guys. .

Thanks. .

We'll take our next question from Chris Rigg with Susquehanna Financial Group. .

Good morning. Thanks for taking my question.

Just wanted to know with regard to development capital spending, do you think the company has the scale or will soon have the scale where at least from sort of the organic development side, excluding external acquisitions that you'll be able to generate enough operating cash flow to cover those expenditures?.

Yes, Chris, I think if you -- as you work through your models for 2016 and going forward, we have now invested to the size that we can internally finance all of the obviously the maintenance CapEx, but also the incremental growth CapEx that is outlined in our bed bills just from internally generated cash. .

Okay. And then, I know that this is way out, but Joey you mentioned it, when we think about getting to his $6 billion by the end of 2020, when you guys think about things internally, does that include other countries beside the U.S. and the U.K.? Thanks. .

No, it does not. This is all the U.K., U.S. that this $6 billion revenue would be coming from those two markets. .

Okay, thanks a lot. .

Thanks..

And we'll take our next question from Gary Taylor with JP Morgan..

Hi, good morning. I just wanted to clarify one thing on the same store margins. I believe companywide same store margin is around 20, but the U.S. same store margins were down 50 basis points.

But again, that wouldn't change your answer Joey that would still just be startup cost and nothing worth calling out?.

No. .

Okay. .

That's correct. .

And is there any hedging program in place or is the consolidated guidance at risk of further strengthening of the dollar? Are you doing anything setting up in terms of hedging?.

Yes, Gary this is David. There is a formal hedging program that's in place. We will continue to see the earnings volatility, and when we talk about the decline in the exchange ratio, that will be a continuing topic in future periods.

But in terms of just the cash flows generated by the business and us using those cash flows we have a hedging program focused on our ability to use the cash flows generated by the business to cover debt payments and other expansion spending. .

So does the full impact of any change in dollar flows through the reported EPS, are you saying the hedging program is not protecting the EPS we'll record I just want to….

That's correct, Gary. .

Okay. And then finally, Joey, you talked about your total bed count goal for 1Q 300, and then over 800 for the year.

Just wanted to try to get the cadence for the rest of the year if possible that incremental 500 bed over 2Q through 4Q at this point, should we just model that ratably or do you see that's more backend loaded, frontend loaded?.

I would do it ratably. .

Okay. Thank you. That's all I had. .

Thanks, Gary. .

And we'll go to our next question from Charles Haff with Craig Hallum. .

Hi. Thanks for taking my questions. I had a question about other geographies besides the U.S. and the U.K.

We've seen other providers like Ramsay doing things in France and just wondered, are there other developed countries that you think your model would lend itself to?.

Charles, this is Joey. We have not been any time looking at other countries. We have plenty to take care of in the U.K. and U.S. So we do not spend any time. And our models getting to the $6 billion run rate doesn't include any new countries so. There is probably some of other countries out there, but we're just -- we're focus just on the U.K. and the U.S.

.

And then, for same store length of stay in the U.S.

it was down slightly about 5% in the fourth quarter, was there anything that you want to call out there or how should we thinking about length of stay in 2016 in the U.S.?.

I'm just looking at the numbers. It was down three-tenth of a day from the fourth quarter 2014. There are two-tenths -- it was down to three-tenth of a day so -- and our RTC [ph] was 169 versus 168. So that was just a minor movement. So there's nothing unusual there. .

Okay.

And my last question on your hurdle rate that you use for de novos or expansions, can you just remind us David or Brent, what type of hurdle rate do you usually use there?.

I mean Charles, I mean usually we're looking at a 15% to 20% hurdle rate. We have a lot of different projects and opportunities and all of them are unique, but that's our general target. .

Okay, great. Thanks, David. Thanks for taking my questions. .

Thank you. .

We'll go to our next question from John Ransom with Raymond James. .

Good morning. .

Hey, John. .

Hard to be clever at the end after all these good questions. One thing I wanted to follow up on….

You could give congratulations on acquisition. .

Yeah, I can say nice quarter guys, but I don't do that. I could.

Going back to CRC, I recall something 600 or 700 empty beds, I'm just curious how many of those are one year on that you represent, what the occupancy rate looks like now, one year on?.

I don't have that number here, but I can give you one little pit bit of an information. .

Perfect. .

The year two -- is at its high senses, it's been at in years. .

You want to put a number on that or – do you want to put a number on that one or no?.

They are well over 100 patients today. .

Okay, great. .

Yes..

And then my second thing to follow up on pro forma for Priory, can you give us just a rough break out about EBITDA and EPS that we should think about with the GBP [ph]?.

Roughly there's about $300 million U.S. EBITDA in the balances in the U.K., but – that may be a quick answer, we can give you that detail later….

But the earnings would be higher because of the tax rate, right? So the earnings exposure is actually higher because of lower tax rate?.

Absolutely. The EBITDA that comes from the U.K. is enhanced by the 20% tax rate over there. That's right. .

Okay. So do you have the rough earnings -- when you think about this year, do you have the rough earnings break out of GBP versus U.S.

or is that a follow up?.

We would need to follow up, we'll give you the right number, I don't have it right in front of us right now, nor does David..

Okay. And then thirdly, when you guys look in the U.S., are you more tempted, I know you're just coming off a big deal, so maybe you'll take a breather. But are you more tempted by addiction deals or by U.S.

psych deals and what's the relative opportunity look like in both those sub-categories?.

Right now, acute is hotter as far as M&A activity. But there are some addiction facilities that are also out there, but right now I would say acute is hotter. And then also there is some activity in the CTC area, but right now, it's the acute. .

Okay. And are you seeing any impetus from payers in the U.S.

to start tracking outcomes or to go to any kind of different models at all?.

No. .

On the U.S.

psych side?.

No, none at all. .

So you guys don't feel the need to integrate on the backend with any kind of outpatient or extended so relatively the acute model for the foreseeable future?.

The acute model, we leave those decisions to the local market. If the CEO in the local market that an outpatient will benefit them or benefit that facility, then we'll look at it and probably do it. But it's market by market. .

Okay. That's all I got. Thank you. .

Thank you, John. .

And we'll go to our next question from Dana Hambly with Stephens Financial..

Yes, good morning. Thank you.

Could you just remind me the CRC synergies that you had expected when that deal was announced and where we are in that process?.

We are right on top of it. We thought at this time, we would have $10 million of the $15 million and we're right there. And we see a clear way to get to the $15 million, so we feel real good about the CRC synergies..

Okay. So you feel, you talked about the conservatism with Priory, you feel that's kind of tracking the same way, that's pretty identifiable with the $20 million that you….

Yes. .

Okay. Just on the U.K.

drivers for modeling, how should we think about in your Priory as it relates to length of stay or revenue per patient day?.

We have those numbers by service and we don't give them to anybody. .

Gotcha. .

Or haven't given them to anybody. .

And Dana, this is David, I think what we would see is the length of stay would be similar and with some of the mix in their services and some of the other business lines that they have, we may see a slightly lower revenue per day compared to the CRC business, but similar other than just the impact of the mix. .

Okay. That's helpful.

And then on the leverage getting that down this year, is that mostly just EBITDA increasing or are there some scheduled debt payments this year?.

It's a combination, Dana, its Brent. It's the increasing EBITDA of the company combined with the scheduled debt amortization with our term loan, we do have a small required amortization. And so just as that debt pays off it's going to naturally move us in combination with the increasing EBITDA to deliver 5X leverage level. .

Okay.

And that leverage includes the synergy -- benefit from the synergies correct?.

That's right. .

And just lastly, the CapEx for bed, that's running about $100,000 per unit?.

Probably a little higher with the blended effect of the U.K. additions for modeling purposes probably $150,000 per bed. .

Okay, thanks very much. .

Okay. Thanks, Dana. .

And it appears there are no further questions at this time. Mr. Jacobs, I would like to turn the conference back to you for any additional or closing remarks. .

Okay. Thank you very much. We had a great quarter. We're off to a good start here in 2016. We're extremely excited about being able to get the Priory transaction close in February 16 and lot of work ahead for us, but I know the teams up for it and we'll be talking to you some time at the end of April at the first quarter.

So thank you for your interest in the company and we got to get back to work. .

That concludes today's conference. We appreciate your participation..