Good day and welcome to Acadia Healthcare Company's second quarter 2025 earnings call. All participants will be in a listen-only mode for the duration of the call. Should you need any assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw a question, please press star then two. On today's call, we ask that you please limit yourself to one question and one follow-up during Q&A. Also, please be aware that today's call is being recorded. I'd now like to turn the call over to Patrick Feeley, Head of Investor Relations. Please go ahead. Thank you and good morning. Yesterday after the market closed, we issued a press release announcing our second quarter 2025 financial results. This press release can be found in the Investor Relations section of the acadiahealthcare.com website. Here with me today to discuss the results are Christopher Hunter, Chief Executive Officer, and Heather Dixon, Chief Financial Officer. To the extent any non-GAAP financial measure is discussed on today's call, you will also find a reconciliation of that measure to the most directly comparable financial measure calculated according to GAAP in the press release that is posted on our website. 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 Healthcare Company's expected quarterly and annual financial performance for 2025 and beyond. These statements may be affected by the important factors, among others, set forth in Acadia Healthcare Company'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. At this time, I would like to turn the conference call over to Christopher Hunter. Thank you, Patrick, and good morning, everyone. Thank you for being with us for Acadia Healthcare Company's second quarter 2025 conference call. We're pleased with our progress to date in 2025 as we continue to execute our strategy in line with our growth objectives. We reported solid top-line growth with total revenue of $869.2 million, up 9.2% over the second quarter last year, while Adjusted EBITDA was $201.8 million, a 7.5% increase over the same period a year ago. I would like to speak for a moment about the recently passed one big beautiful Bill Act. We believe the provisions of the bill are manageable over the coming years, particularly due to the carve-outs from work requirements and the extended timeline for implementing changes to the supplemental payment provisions of the Medicaid program. For the full year 2025, we expect gross revenue of approximately $230 million from existing state Medicaid supplemental programs. More than half of this revenue comes from states that may begin reducing these payments starting in fiscal 2028 if proposed changes to the programs are implemented. If these changes occur, we also anticipate that a portion of the revenue loss would be offset by a reduction in the provider taxes we pay in those states. Regarding the Medicaid work requirements included in the legislation, we do not expect a material impact on our operations as these begin to be phased in next year. This is largely due to exemptions for the populations we serve, including individuals with chronic substance use disorders and those with serious and complex medical conditions. At Acadia Healthcare Company, we remain committed to delivering essential care to underserved and vulnerable populations. We will continue to prioritize partnerships with payers and state agencies that recognize the long-term cost savings of integrating mental and physical health care and the importance of addressing behavioral health needs nationwide. On that note, we're pleased to share that the State of Tennessee has approved a new directed payment program, underscoring the critical role behavioral health services play in supporting community well-being. This approval marks a meaningful step in the broader national movement to invest in behavioral health programs that are vital to expanding access, improving outcomes, and meeting the growing demand for behavioral health services across the country. Turning to development activity for the second quarter, we added 101 beds to existing facilities, bringing the total to 191 beds added to existing facilities for the first half of 2025. Including the 288 beds from newly constructed facilities, we have added a total of 479 beds to date in 2025. Our new facility construction projects have also progressed nicely. We are extremely proud to be a preferred partner to many premier names in health care who want to integrate behavioral health into their system with a shared purpose of improving both mental and physical outcomes for more patients. Over the past two months, we have completed construction of three new facilities in conjunction with our joint venture partners. This includes our second facility with Geisinger, located in their headquarters city of Danville, Pennsylvania, which opened earlier this month. Two other joint venture facilities have completed construction and are scheduled to open later this year. Acadia Healthcare Company also added four new Comprehensive Treatment Centers, or CTCs, for opioid use disorder, extending our market reach to 174 CTCs across 33 states. We have now added 11 CTCs to date in 2025. Moving to volumes in the second quarter, same facility patient days increased by 1.8%, which was slightly below our expectations. We saw strong performance in our specialty and CTC lines of business, with same facility growth in the mid single digits for each, consistent with our expectations. As we have discussed previously, our same facility results continue to be impacted by a handful of underperforming facilities. While performance at the majority of these facilities was generally in line with our expectations, we did observe a deterioration in performance at one facility, which continues to face particularly strong local market pressures, which we are closely monitoring. More broadly, volumes in our acute care business came in slightly below expectations, while demand across the majority of our business remains robust. Health care is inherently local, and we experience pockets of weakness in volumes in certain acute care markets with higher Medicaid exposure. We believe this pressure on Medicaid volumes is consistent with what peers experienced during the second quarter. Medicaid volumes at our acute care hospitals were down slightly on a year-over-year basis in the second quarter, while commercial and Medicare volumes increased by 9% and 8%, respectively. Before turning the call over to Heather, I want to talk about our quality initiatives as we extend our market reach in 2025. Patient safety and quality patient care are central to our mission and we continue to focus on quality across our operations, leveraging technology and utilizing data to reduce medication errors, improve care coordination, support quality, and ensure the consistent delivery of evidence-based care and support strong clinical outcomes. We believe Acadia Healthcare Company has led the industry in adopting the latest technology and evidence-based practices. Our facilities are licensed, accredited, and regularly inspected to uphold high regulatory and quality standards, including rigorous requirements for employee training and patient safety. We have remote 24/7 patient monitoring devices in Acadia's acute facilities, which enhance patient safety and provide critical documentation of patient care and outcomes, and ensure more consistent care protocols across our facilities. Our hospital staff and clinicians are also provided with wearable safety devices that enable expedited responses and mitigation of adverse events. We have implemented robust analytics through an integrated quality dashboard that provides real-time visibility into over 50 distinct safety, patient experience, and regulatory compliance-related key performance indicators, providing facility leadership with real-time insight into operational effectiveness across our hospitals. Our operators use this data on a daily, weekly, and monthly cadence to drive our continuous quality improvement efforts at the bedside and throughout our facilities. Our ability to harness this data and accurately measure outcomes is an important advantage in negotiating with payers who are focused on value-based care. We will continue to invest in technology to strengthen our core capabilities and support a strong culture of accountability for quality. Our Corporate Quality and Safety Committee conducts quarterly performance reviews that help us maintain consistency in clinical practice across our operations, and our Corporate Compliance Committee conducts quarterly reviews to ensure compliance with our internal Code of Conduct. Importantly, our quality initiatives, investments in the latest technology, tools, and evidence-based protocols support the work of our employees and clinicians. Working together with our facility operators has helped us attract skilled practitioners and maintain talent in a competitive labor market. We are experiencing more favorable labor trends in 2025, supported by our initiatives centered around more centralized facility level recruitment, retention and employee engagement, and a strong focus on extensive training in our local markets. We commend our approximately 25,000 dedicated employees for an outstanding job in providing quality, compassionate care for the patients and families who seek our care. Lastly, I'd like to take a moment to recognize Heather Dixon, who will be stepping down from her role as Chief Financial Officer later this month. Over the last two years, Heather has been instrumental in strengthening our financial foundation and advancing our growth strategy. Her leadership insights and unwavering commitment have left a lasting impact on our organization. On behalf of the Board of Directors, the Executive Leadership Team, and all of us at Acadia Healthcare Company, we extend our sincere gratitude to Heather and wish her continued success in her next chapter. As we begin the search for a permanent successor, I'm pleased to announce that Tim Sides, currently Senior Vice President of Operations Finance, will assume the role of Interim CFO. Tim brings extensive experience and deep operational expertise and we are confident in his ability to ensure a seamless transition and continued financial stewardship. With that, I would now like to turn the call over to Heather to discuss our financial results for the quarter. Thanks Chris and good morning everyone. We reported $869.2 million in revenue for the quarter, representing a 9.2% increase over the second quarter of last year. Adjusted EBITDA for the second quarter of 2025 was $201.8 million, reflecting an Adjusted EBITDA margin of 23.2%. Same facility revenue grew 9.5% year- over- year, including a 7.5% increase in revenue per patient day and 1.8% growth in patient days. On a same facility basis, Adjusted EBITDA was $256 million and Adjusted EBITDA margin was 30.1% in the second quarter of this year. During the second quarter, the Tennessee Supplemental Payment Program was approved. As a result, we recognized a favorable pre-tax benefit, $51.8 million in the quarter, of which $28.5 million related to the fiscal year 2024 and $11 million related to the first quarter of 2025 with $12.3 million related to the second quarter of 2025. This compares to $8.6 million in net supplemental payments from the state recognized in the second quarter of 2024. Also included in our second quarter results were startup losses of $14.2 million related to recently opened facilities compared to $4.6 million in the second quarter of 2024. Looking at the balance sheet, maintaining a strong financial position remains a top priority while providing us with sufficient capital to make strategic investments in our business. As of June 30th, we had $131.4 million in cash and cash equivalents and $828 million available under our $1 billion revolving credit facility. Moving on to our outlook for 2025, based on our results through the first half of the year, we are updating our Adjusted EBITDA range for the full year to $675 to $700 million. This is primarily due to lower expected volume growth and higher startup costs, partially offset by an increase in anticipated supplemental payment. For modeling purposes, we expect our Q3 Adjusted EBITDA to be modestly above Q4, which is in line with typical seasonality for the full year. We now expect same facility volume growth in the range of 2%- 3% compared to the prior expectation of low to mid single digits. Startup losses are expected to be approximately $60- $65 million for the full year. The $10 million increase relative to our prior guidance is due to new facility construction running ahead of schedule. For the full year, we now expect to add between 950 and 1,000 total beds compared to our previously expected range of 800- 1,000 beds. We now expect net Medicaid supplementals to increase by $30 to $40 million in 2025 as compared to the prior year, including a $40- $45 million recurring benefit from the recently approved Tennessee program. With that, we're ready to open the call for questions. We will now begin the question and answer session. To ask a question, you may press star or one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To enjoy your question, please press star then two. As a reminder, we ask that you please limit yourself to one question and one follow up. At this time, we will pause just momentarily to assemble our roster and our first question today will come from A.J. Rice with UBS. Please go ahead. Thanks. Hi everybody. Best wishes, Heather. Just maybe drill down a little bit on your comment about Medicaid, maybe expand a little bit on exactly what you're seeing. Is it an issue with getting you get the patients in, but they're not approving the length of stay you think they should approve, or are they not referring the patients over and is this something specific to Acadia or you think this is happening across the board and maybe then where are those patients going? I guess. Yeah. AJ, this is Chris. Thanks for the question. The primary driver of volume coming in below our expectations really was the weaker Medicaid volumes in our acute care business, which is what you're asking about. I'd say a couple things. I think we believe this reflects some of the evolving utilization patterns among managed Medicaid plans, which are navigating elevated cost pressures across the board. It appears these dynamics are having some impact on admissions trends across our inpatient services, including behavioral health. There is always a natural tension between providers and payers. I think we remain confident that the high acuity populations we serve and the strong outcomes we're able to deliver are critical to long term care cost efficiency as well as network adequacy. We continue to engage constructively with our partners there on access and outcomes. We will continue to proactively work with our payer partners to that regard. Okay. On the startup costs that you're incurring, I think you've upped the number for this year by about $10 million, if I have this right. Is that accelerating programs that were going to come in next year and therefore hopefully that helps the year to year trend? Or is it that it's taking longer or the ramp in the new facilities is slower than you'd anticipated and that's contributing to a step up in startup costs. Hi, AJ, this is Heather. It's actually a little bit different. The $10 million in incremental startup losses is reflective of an accelerated opening pace. During the year we have been experiencing some opportunities to open the beds a little more quickly than what we had anticipated, and that means that we are experiencing those incremental startup costs earlier in the year than what we would have previously anticipated. That's really what's driving it. What that means, though, is it's effectively a pull forward from 2026. You would expect to see 2026 startup losses decline even more than we had originally anticipated. Okay, thanks a lot. Our next question will come from John Ransom with Raymond James. Please go ahead. Hey, good morning. Chris, you and I have talked in the past about, you know, free cash flow outlook and is there an opportunity in 2026 to kind of pull forward your free cash flow positive outlook and if so maybe you could elaborate on that. Thanks. Yeah, thanks for the question, John. We have previously guided to being free cash flow positive at the end of 2026. I think a couple points I would make. First of all, the beds that we have built recently, we just believe are going to continue to pay dividends for years to come as they ramp up and we continue to be really excited about those. I think as most know, we built and licensed 776 beds last year and we expect to build up to 1,000 beds this year and we continue to be on track there. However, given the environment and more specifically the policy environment with the amount of uncertainty created by the recently passed one big beautiful Bill Act, we are going to absolutely take a harder look and are taking a harder look at capital spending in our pipeline of projects. We have the opportunity to take a pause on some of our expansion capital spending. This would, of course, enable us to unlock more of the underlying free cash flow of the business at a faster pace. I would also add that it would have the added benefit of enabling us to unlock more near term EBITDA. Startup costs would decline at a faster pace and at the same time we still have the multi-year benefit of a significant number of ramping beds that we have assembled over the past few years that are coming online. We are in the process of looking at all this now. I think to give you a granular example, we have identified two facilities in our pipeline that we have hit the pause button on and that will save us over $100 million in CapEx over the next couple of years. We are still going through the process and we expect to have more to say over the next few months. To your question, we do think that there is opportunity to accelerate our path to becoming free cash flow positive as a result. Great. My follow up is going back to AJ's question on Medicaid. A couple things there. Are you seeing a difference between non-managed Medicaid and Medicaid in terms of admissions? Do you have a stat, like is there some stat that says, okay, we are, you know, we can quantify denial rates or prior auth rates that are elevated by X amount? I'm just kind of curious. Do you think part of this would be the fact that the Medicaid population continues to shrink with redetermination 2.0? I'm just trying to get a sense. Is it a smaller population or can you really point to something that says, yeah, they're just making it, that they've stepped up the prior auth and they're just making it harder to get referrals? Yeah. John, I would not call anything out with respect to managed Medicaid plans and the difference. I just don't think that there are any statistics right now that we, I mean, something that clearly we're going to continue to look at. There is nothing right now that we would pinpoint on that front. Okay, thank you. Yep. Our next question will come from Whit Mayo. With Leerink Partners. Please go ahead. Yeah, hey, thanks. How much did the underperforming facilities drag on your same store patient days within the quarter and then you've called out $20 million of losses on those underperforming facilities. Has that changed at all? Would you expect that to normalize by the fourth quarter or could those go lower or higher? Thanks. Yeah, thanks for the question. Whit, this is Chris. I'll take it. I think I'd step back and just remind everyone that our 2025 guidance assumed a roughly $20 million EBITDA headwind for the full year from this group of underperforming facilities that we called out back during the fourth quarter. These facilities have performed overall in line with our expectations on a year- over- year basis. They did have a negative impact on our same facility patient volume growth of about 80 basis points in the second quarter. We expect to begin to comp over this headwind, the volumes in the fourth quarter of this year. Couple things. I think the underperformance of facilities has tended to be correlated to more intense local media coverage. I referenced that in the prepared remarks within a facility's local market rather than any news at the national level. I'd also say it's just difficult for us to put an estimate on the timing of the turnaround of the small group of facilities. We therefore believed it was prudent to take a more conservative approach when we set the guidance. We're continuing to work through these every day. I think that hopefully answers your question. I'll just add one more piece. From a numbers perspective, Whit, we had called out, you know, we thought it would be a drag of around $20 million for the full year. We're seeing that be about $3 million worse than what we had originally anticipated. That is attributable to the one facility that Chris has called out, which we are clearly watching very, very closely. Okay. Maybe just on the guidance for the full year, Heather, just any bridge or framework that you can provide for us to think about, you know, first half to second half, to give us some confidence in the achievability of the full year. Maybe comment on the net supplemental funding increases in the second half and malpractice. Thanks. Yeah, let me take those in turn. I'll say a couple of things on the bridge from a guidance perspective. If you look at the different pieces that are really driving the change that we made, I start with the startup losses that I talked about. That's about an incremental $10 million. That of course is due to the faster bed opening pace that we just talked about. Those are offset by our incremental supplemental payments. We now expect supplemental payments to be about $25- $30 million better than what we previously expected. You recall, we previously expected for supplemental payments to be flat to up $15 million on a net basis year- over- year. We now expect that to be $30- $40 million of a tailwind for the full year. That's offset by the volume that Chris has been talking about. The remainder of the change in our guidance would be related specifically to those softer volumes. We think that's around a $30 million drag for the year. Those are the moving pieces. I think the second part of your question, you asked about how do we ramp from the first half to the second half and what gives us confidence. I'll talk about a couple of things. If you think about the second half and what will be coming through, the first is our normal rate updates. You'll recall that those disproportionately happen in the second half of the year. The second thing I would point to is the supplemental payments. Again, excluding Tennessee, we also expect higher supplemental payments in the second half of the year compared to the first for various other state increases that we're seeing. Finally, from a volume perspective, we'll be seeing a growing contribution from the new beds that we have added as we move throughout the year. There are two pieces to that, particularly related to our 2023 cohort of de novos. Those have now been in place for long enough that we're seeing some really good contribution from those, particularly as we move into the second half of the year just given the timing of the openings for 2023 and also the recent bed expansions that we have added. Remember, we've added almost 200 this year alone. Those will begin and will continue to ramp for the second half of the year. Those are really the moving pieces from the first half to the second half. I'll just remind you that we're also comping over the headwind from the underperforming facilities that began in the fourth quarter last year. Okay, thanks. Sure. Our next question will come from Brian Tankel with Jefferies. Please go ahead. Hey, good morning. Maybe just a question first on fundamentals, Heather, as I think about wages or wage spend up what like 7%, 7.8% year- over- year, obviously volumes have been in the low single digit range. Just curious what you're seeing on the wage front and just the labor expense line. Yeah, we're actually seeing some really good improvement and, you know, frankly, consistency with some improvement on that line from a labor and wage front. We've seen a reduction in premium costs as well. That's all very favorable that we're watching. You know, we had, of course, you'll recall that we had seen some pretty high watermarks a few years back from a labor perspective. We've been managing that very closely and focused on it. We had reported previously that we were below the 5% mark when looking. We've seen that come down even further. It's now roughly around the 3.5% range of what we saw for second quarter, and we see stability in that number. Yeah. And then my follow up, Chris, as I look at the disclosures, it looks like you spent $54 million or so during the quarter in government investigations. Air quotes. Curious. Anything you can share with us in terms of are there settlement numbers included in that and any progress you're seeing in terms of the discussions with the government to address these issues? Sure. Thanks for the question. A few things that I would point out, I think, as we previously communicated, we're committing to and have been committed to conducting a very thorough and independent review of our operations while continuing very cooperatively with the DOJ and the SEC. While the pace of the government investigations and the related internal reviews that we're doing are going to naturally ebb and flow, much of the independent review and the cooperative engagement with the government has been performed in the first half of the year. We can't predict how long this process will take or how much the investigation and engagement with the government is going to ultimately cost. We do currently anticipate a reduction in the cost associated with the investigation over the second half of the year. Anything you'd add, Heather? I would just pick up on the last part of your question there around whether there are any settlement costs in there. There are not. Those are just legal fees specifically related to the investigations and the pieces that Chris just walked through. Any settlements on normal recurring litigation items or the cost of defending those items is included in our other operating expenses. Got it. Thank you. Sure. Our next question will come from Pito Chickering with Deutsche Bank. Please go ahead. Hey, good morning, guys, and thanks for taking my question back to sort of the managed Medicaid question. From a process perspective, if a patient shows up in the ER, how is managed Medicaid blocking them from getting admitted? Are they just stuck in the ER until they stabilize? Are they blocking patients coming from courts, schools, or parents? Yeah, Pito, I would say it can completely depend. There clearly can be authorization challenges that we can see on the front end where there are frequent approval things that were streamlined before. We have to go back and get multiple approvals. There can just be some general friction throughout the patient's stay that we're dealing with as well. We continue to be very confident that we're going to be able to constructively work through this. I want to point that out, but that's what we're seeing. Okay, great. Looking at your Medicaid population in acute specialty, CTC, and residential, how do you think that the work requirements could impact each of those sites? Yeah, thanks for the question. I would say that just generally with work requirements, CMS is still in the process of writing the regulatory language there. The broader point for us is that we think that all mental health and substance use treatments are going to be exempt from the one big beautiful Bill Act's new copays that are going to apply and that will directly have relevance to our patient population across the board. There is still a little bit of work that's being done with respect to CMS. In the language, I would call out that we believe that the significant majority of the populations will be exempt. HHS also noted that from the work requirement provisions until 2028, if a state is making reasonable efforts to implement the rule, they can be exempted. I would say it's hard to predict. There is a scenario that many or most states would delay as much as possible. I'd remember that states have had the option in the past of implementing work requirements at the state level and only a small minority have actually pursued them, notably Missouri, which then quickly repealed its programs. This is something that we're continuing to follow and feel like we're continuing to be well positioned with our patient population. Great. Thanks so much. Yep. Our next question will come from Ben Hendricks, RBC. Please go ahead. Great. Thank you very much and reiterate congratulations and best of luck to Heather. Just thinking through the other smaller elements of the guidance of the Bridge to Guidance. I think that last quarter you had called out about a $5 million headwind from closed facilities year- over- year and $10 million increase in professional liability fees. Just wanted to see if any of those elements, first of all, have changed. No, thank you for the kind words, Ben. I appreciate it. There are not any changes to those other items. It's really just the few that I talked about. Okay. Following up a little bit on the headwind from the underperforming facilities, can you talk a little bit about your strategic alternatives for addressing those facilities in the future? Specifically, how are you balancing your ability to address the referral headwinds that you're having there that may be press related versus potential for exit in those markets? Thanks. Yeah, thanks for the question, Ben. I appreciate it. I would say several different things. First of all, we're constantly evaluating our portfolio and as we go through the trade offs, we've said in the past that we just won't hesitate to close underperforming facilities if we don't see a path to improvement. We have worked extensively with so many of these facilities that have had media headwinds to be proactive in reaching out to referral partners and to be very deliberate in making that happen. We've been doing that all year long and we've seen real success in making that happen. We do have 274 facilities. As always, we're going to continue to routinely evaluate the portfolio. When, on a case by case basis, we find a situation that we can't indefinitely fund without a path to viability or strong utilization, that would be a scenario that we would look at potentially closing a facility. We really believe that would be an irresponsible use of resources that could be deployed where more acutely needed. We're very focused on capital allocation and getting a maximum return on our capital for investors. Also, if we have a facility that doesn't fit in strategically, we want to have the flexibility to reevaluate the operation. That could mean an exit, it could mean we temporarily close it, or we repurpose the facility to better fit strategically as well. We're also going to continue to expand our bed capacity and open facilities across the portfolio that do make sense and have a continued strong return. We're just monitoring that each and every day, including with our very respected JV partners. Great, thank you. Our next question will come from Andrew Mok with Barclays. Please go ahead. Hi, good morning. I'm still confused on the weaker Medicaid volumes. How are you able to isolate this as a payer issue versus broader Medicaid disenrollment or a pullback from the immigrant population? Is that just a working theory on your end or is there more concrete evidence to support that? If this is a payer issue, why would this improve when the national Medicaid payers are well below margin targets and likely increasing utilization management near term? Thanks. Yeah, I would just say, Andrew, that we're seeing different behavior by payer that we're continuing to monitor every single day. I wouldn't call anything out on the immigrant. This is all very new that we're continuing to watch and monitor. What's not new is that there has always been a natural tension between payer and providers, and we're going to continue to monitor and work through that. Okay. Maybe just a follow up on cash flow. I think your operating cash flow guidance was revised down $12 million for the year, which was in line with the EBITDA reduction. Can you remind us what's excluded from that number and what that number would look like on a reported basis? Thanks. The free cash flow obviously is looking at our operating cash flow. It then excludes the usual items that would come about that are the fundamental items like debt service and those types of things. In our case, the question that we have been going through on two things, one, CapEx and then also recurring legal costs. Sorry, non-recurring legal costs are excluded there as well. Got it. That number needs to be adjusted down at least $100 million for the transaction costs. Correct. There’s roughly 30 in Q1 and then another 50 in Q2. If you’re looking at a full year, that’s not a bad estimate, Andrew. Okay, thank you. Of course, our next question will come from Matthew Gilmore with KeyBanc. Please go ahead. Hey, thanks for the question, and best wishes to Heather as well. Following up on the acute volume pressures you called out for Medicaid, is there anything you'd note in terms of how volumes progressed throughout the quarter and maybe even into July? Just curious if there was a cadence with respect to some of the pressures you're seeing on the Medicaid side. I'll let Chris answer that, but I'll just say thank you for the kind wishes, Matt. I appreciate it. Yeah, I would say the we started out the quarter with volumes running a little bit higher in the 3% range, and those came down and then have leveled out to between 1% and 2%, which we saw in the final month of June. It started out, came down a little bit, and then went back up and has leveled off. I wanted to see if you could provide some comments on the stronger commercial and Medicare volumes. I guess intuitively it would seem like given that supply and demand dynamics, you could probably backfill some of the softer Medicaid volumes. Just kind of curious on the Medicare commercial trend, if there's anything in particular driving that. Is there a comment with respect to kind of backfilling that capacity as it becomes available? The only thing that I would call out is just that our managed care team, I think, has done an excellent job of just continuing to secure commercial and Medicare contracts throughout the year. Over the past year, we obviously have a strong Medicaid concentration, but we've done a really good job of being deliberate about trying to diversify that and have been able to successfully contract across the board. That's all I would call out. Okay, thank you. Yep. Our next question will come from Ryan Langston with TD Cowen. Please go ahead. Great. Thanks. I guess, looking for any updates on the conversations with these referral sources at these underperforming facilities. Are you making any progress there at all? Maybe just more broadly, what are these referral sources looking for from you to maybe start ramping up those referrals again? Yeah, no, thanks for the question. I would say it really depends. I think one of the things that we always do with our referral sources is we're very intentional about pointing out the acuity of the patients that we serve. We're also very deliberate about bringing them into the facilities so that they can actually see the good work that we're doing every day. We are very intentional about discussing the strong investments that we've made in quality, and we show them what we're doing with respect to patient monitoring, the staff safety devices we put in place, our EMRs, the way that we are monitoring quality through our Joint Commission AMP software. It's really important that they see not only the talk around quality, but how that's following, you know, how we're following through on that. We've seen real success across the board. We're always trying to get them on site, but even when we're not, I think we've done a very good job of helping them translate the investments that we've made across the board in technology and quality into very strong results. I think the other thing I would point out is we have very strong patient satisfaction scores that we have been very intentional about measuring. Even with involuntary admissions, they continue to be very strong. We certainly share those as they become available. We also have been very intentional about sharing data with respect to patient outcomes. You know, are our patients getting better clinically as a result of our care? Is the quality of their life improving? All of our data says that the outcomes have been very strong in that respect. We're sharing that patient experience, the patient outcomes, the data, and getting them on site. That has just proven to be very successful. Great. You mentioned sort of issues at one particular facility. I think you said local market pressure. Can you elaborate on exactly what that means? Is that pressure to that facility specifically or something kind of more broad based in that particular market? What I said in the prepared remarks was with respect to local media that goes back many years, that has just proven to be problematic and has challenged us with respect to volumes and, you know, as a result, our performance in that one singular facility. Okay, thanks. And Heather, thanks for everything. Good luck. Thank you. Thank you. Our next question will come from Joanna Gajuk with Bank of America. Please go ahead. Hey, good morning. A couple of follow ups. First, on the comments in the prepared remarks around the impact of the reconciliation bill and specifically the state directed payment program. You said more than half of the, I guess, $230 million benefit comes from states that you think may begin to reduce these rates in fiscal 2028. Just to clarify, are you saying more than half, as in not every state, because these are the states where the rates under these programs are above Medicare? Is that the reason why you say more than half, not everything, not every state? That's exactly right. As it relates to those programs, the benefit from the Tennessee program was higher than you had expected year- over- year. Is it essentially because the rates in that particular state under this program are moving up close to commercial rates? Yes. Okay. Another question, hopefully a yes or no answer, in terms of your volume outlook. You mentioned that the comps will be easier in the fourth quarter. Do you still expect mid single digits growth in volumes in Q4 because of the easier comps? I think that's a reasonable expectation for sure. We still expect that. We previously said low to mid single digits and growing to that mid single digit in the second half of the year, particularly in Q4. We still believe that's true. Our next question will come from Jason Cassorla, Guggenheim. Please go ahead. Great. Thanks for taking my question. You talked about perhaps taking a bit of a pause on capital spending on a couple facilities, but maybe can you just help square up the step up in the midpoint of bed additions this year against the lower CapEx guide? Maybe just said another way, has the CapEx allocation towards kind of bed additions changed in your view? Thanks. It's a great question. If I think about that in a couple of different pieces, we look at the CapEx for this year. Certainly, we had a significant step up related to the significant number of beds that we're adding. What we are seeing is our ability to open some of those beds that we had anticipated earlier than what we had expected. The CapEx we expect will decline in the second half of 2025, and we continue to expect that. We believe it will continue to decline even further as we move into 2026. The small decrement that you see for the balance of the year is related to what Chris referred to, the pausing of a couple of those projects. Those are projects that are very early stage. While it takes around two years to complete construction on a facility, the sort of work in advance of that related to planning and design and some of those elements begins even earlier. It's really the elimination from 2025 of those types of costs related to where we will see a reduction in those related to where we're pausing. Okay, got it. Thank you. Maybe just as a follow up, I know it's early to discuss 2026, but as we think about the 2025 EBITDA jump off point, would we just be excluding the 2024 retro Tennessee supplemental payment and think about a kind of less $660 million EBITDA base to jump off for growth next year, or are there any other puts and takes that might impact kind of where we should think about the jump off point for growth? Thank you. You're right, Jason. It's early to talk about 2026, so I don't want to try to even put any guidance out there. Let me give you a couple of points. First, we have high confidence in the accelerating growth that we're seeing. The success with the bed additions, our ability to pull some of those forward and open them even faster. I just want to make sure that I'm really clear in regards to your question on Tennessee. You know we walked through the numbers and they're all laid out in the release. For 2025, we now expect that the full year will include $40 to $45 million of net impact from Tennessee, and that will be related to the end year amounts. Said another way, we can expect somewhere in that range as a run rate on a go forward. I want to make sure that that's clear that these are not a one-time payment. They were just a little lumpy. Finally, I'll mention it again, I think it's worth mentioning again the startup costs will go down. We always knew that 2025 was going to be a very high watermark from a startup cost perspective because of the significant number of beds we added in 2024 and 2025 and then some element at the end of 2023 as well. Those we will expect to step down. I'm short of putting any other pieces out there, any numbers around it, but hopefully that gives you a good idea of how to think about 2026. Great, thank you and best of luck. Thank you. Our next question will come from Raj Kumar Stephens. Please go ahead. Hi, good morning. Just kind of wanted to reflect on the supply and demand mismatch for higher acuity behavioral services that the company's called out and hence the development pipeline and comparing that against the same store metrics. Maybe can you walk us through where are the gaps beyond just the Medicaid dynamic, just kind of relating to maybe labor. If there's competitive dynamics in your markets that you're seeing that are kind of causing the non-handful of facilities that are not a previous call out as underperforming, maybe driving that near term constraint. Thank you for the question. Clearly healthcare is local and every single one of these facilities is in an individual market that are different. Each one of them we have to consider that. There certainly can be situations where there are staffing challenges and there could be headwinds. I think we've done a really good job of trying to identify that. There's really nothing I would call out on that front. I think the demand is something that, as we've discussed in the prior question, reinforced that our referral sources in these markets are very important. We've tried to be very intentional of focusing there as well. I think those are the major things that we would call out in addition to the things that I previously mentioned in terms of just reinforcing all of the investments that we are continuing to make to make sure that we're treating, we're caring for these patients appropriately, we're treating them with strong clinical outcomes and that we have results that we can share not only with our referral partners, but also with payers. I think we've done a very good job of doing that. As my follow up, by looking at the growth process pathways that you've laid out, maybe an update on the PHP IOP kind of penetration across your portfolio facilities. I know that was something that you'd previously highlighted in terms of how many facilities that you were kind of adding those programs to, but maybe any update in the quarter around that. Yeah. What I would say on PHP IOP is that we have always believed that, particularly with the strong, acute book that we have, there is a natural step down from our higher acuity patients to PHP and IOP settings. We have tried to be very intentional about ensuring that happens on a very methodical basis. I think we have taken some strong ground in enhancing those referral patterns and ensuring that across our book of business, we're always looking to step those patients down to Acadia facilities. That was not always the case. This part of the business is one that we think has real growth potential over time and that we're continuing to address. We're not going to call out any specific metrics right now on that, but that's something that we will certainly be coming back and talking more about in the future because at its essence, there is such an opportunity for us to improve patient outcomes by having an appropriate step down in care. PHP and IOP will both continue to be an important part of our strategy. This concludes our question and answer session. I'd like to turn the conference back over to Christopher Hunter for any closing remarks. Thank you. In closing, I just want to thank our committed facility leaders, clinicians, and approximately 25,000 dedicated employees across the country who have continued to work tirelessly to meet the needs of our patients in a safe and effective manner. As the leading pure play behavioral health provider in the United States, we are proud of the important work we're doing to address a critical societal need in our nation. We remain focused on our purpose to lead care with light. Thank you all for being with us this morning and for your interest in Acadia. Have a great day. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.