Hello, and welcome to the Acadia Healthcare fourth quarter 2024 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. To ask a question, you may press star then one on your telephone keypad. As a reminder, this conference is being recorded. I would now like to hand the call to Patrick Feeley. Please go ahead.

Thank you, and good morning. Yesterday after the market closed, we issued a press release announcing our fourth quarter 2024 financial results. This press release can be found in the Investor Relations section of the acadiahealthcare.com website. With me today to discuss the results are Chris Hunter, Chief Executive Officer, and Heather Dixon, Chief Financial Officer. To the extent any non-GAAP financial measure is discussed in 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's expected quarterly and annual financial performance for 2024 and beyond. 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. Okay. At this time, I would like to turn the conference call over to Chris.

Thank you, Patrick, and good morning, everyone. Thank you for being with us for Acadia's fourth quarter 2024 conference call. For the fourth quarter, we reported solid financial and operating results, capping off another year of growth and progress for Acadia. Total revenue increased 4.2% over the prior year's fourth quarter to $774 million. For the full year, we delivered over $3.1 billion in revenue, a 7.7% increase over 2023. Same facility patient days grew 3.2% in the fourth quarter and remained stable between 3% and 4% in each month throughout the quarter. Excluding the impact of a handful of underperforming facilities, same facility growth would have been above 5% in the quarter. We also benefited from a more stable labor environment in 2024, supported by our initiatives centered around recruitment, retention, and employee engagement. And a strong focus on training in our local markets. Working together with our facility operators has helped us attract and maintain talent in a competitive market. I'd like to now take a moment to reflect on what drives us forward as an organization and why I remain as confident as ever in our strategy. At our core, we are a company dedicated to transforming the lives of patients, families, and those in the communities we serve for the better. Our facilities treat many of the most complex high acuity cases and fill a critical gap in the continuum of care for evidence-based specialized behavioral health care. What sets us apart is our unwavering commitment to putting patient needs first, setting a high bar for care standards and compliance, and prioritizing quality. We back up this commitment by investing heavily in technologies to enhance safety and people and processes to support effective patient care delivery. We believe we have led the industry in adopting the…

Thanks, Chris, and good morning, everyone. Our fourth quarter financial performance reflects consistent growth trends across our diversified portfolio of behavioral health service lines. We reported $774 million in revenue for the quarter, representing an increase of 4.2% over the fourth quarter of last year. Same facility revenue grew 4.7% compared with the fourth quarter of 2023, which included patient day growth of 3.2% and an increase in revenue per patient day of 1.4%. As Chris mentioned, same facility patient day growth stabilized in the 3% to 4% range for each month in the quarter. Our revenue per patient day growth moderated versus the third quarter primarily due to the timing of supplemental payments. Absent the impact of timing, pricing trends remained stable as payers continued to place a high degree of emphasis on the behavioral health needs of their members. Adjusted EBITDA for the fourth quarter of 2024 was $153.1 million. Adjusted EBITDA margin was 19.8% compared with 22.8% for the same quarter last year. On a same facility basis, adjusted EBITDA was $196.4 million and adjusted EBITDA margin was 25.7% in the fourth quarter of this year, and 28.4% for the prior year's fourth quarter. During the fourth quarter of 2024, we recorded a $4 million increase to our reserves for self-insured professional and general liability claims. This adjustment is related to years prior to 2024 and is largely a result of the unfavorable trends experienced by the broader industry in recent years. Startup losses related to new facilities were $11.2 million in the fourth quarter of 2024, a $6 million year-over-year increase relative to the fourth quarter of 2023, and a $4 million increase sequentially over the third quarter. A reflection of the step-up in the number of newly constructed facilities. These quarterly results also reflect a…

Hey. Thanks. Maybe Heather to follow-up on that last comment. Obviously, you have a lot of capital commitment this year. Guidance implies that you're burning maybe $180 million of cash. The interest expense is up presumably. Might include some incremental debt required to on the growth still. One of their financing plans this year. And can you give us an idea on preliminary sources and uses of cash next year? Like, how much exactly will the growth CapEx and IT spending be down in 2026.

Hi, Whit. Thanks for the question. Yeah. Just to give you a little bit of information in regards to the financing option that you mentioned. If you look in our 10-K, you will see a disclosure included regarding the refinancing that we are just about to wrap up. It mentions that we have refinanced the existing bank facilities and also that we will be upsizing our to about a billion dollars. So that is contemplated in what's disclosed in the 10-K, and there should be more coming about that shortly. In terms of free cash flow and how we think about that, we have messaged and you would have seen in our disclosures that came out in the press release that we to see cash flow be back to cash flow positive by the end of 2026, and that is largely a result of a couple of things. The first would be the EBITDA contribution that we expect to see beginning in 2026, and that is as you know, the result of a couple of things. One, the contribution from the new beds that we have been adding, those should start to really generate nice EBITDA in 2026. And to the cessation of the elevated level of costs associated with the preopening of those facilities. So those two things in confluence should generate operating cash flows at a nice rate. In addition, you'll see that CapEx will come down as well. The high watermark for CapEx so it came to the end of 2024 and we'll continue with that rate in the beginning of 2025 as we continue to have that high pace of beds opening. But that should moderate and then start to decline in the back half of 2025 and then continue to decline in 2026.

Is there a number that you can share within a range for how much the CapEx is going to decline next year?

You know, it's I don't I don't wanna provide guidance on 2026 at this point, but we would expect the run rate of CapEx to come down materially over 2025 and then again into 2026. I mean, maybe ballpark around $100 million.

Okay. And then the follow-up here, just the first quarter guide implies that you're gonna earn, I think, like, 18% of the full year, which certainly a question that we're getting. Can you just maybe help us think through a bridge from the first quarter to the full year? I mean, there should be more supplemental dollars in the back half, fewer startup losses, maybe an expectation the growth is better. Just any numbers around that to frame kind of the walk forward would be helpful. Thanks.

Yeah. Let me let me take that, and, hopefully, I'll I'll hit the pieces that you were looking at. So you can see in the first quarter and certainly the full-year guidance that the first quarter is expected to contribute less to the full year than what we would see in a typical year. But we would also anticipate the second quarter is likely to be less than typical as a percentage of the full year as well due to similar timing factors. Looking year over year. That's largely driven by a couple of things. You know, the first is startup cost that we've been talking about and then also the timing of supplemental payments. Yeah. We expect the first quarter to be the high watermark for startup losses. What about $20 million in total startup losses for the quarter out of the $50 million to $55 million that we're guiding to for the full year. So think about roughly 35% to 40% of the full-year startup cost landing in the first quarter alone. Startup costs are expected to taper down over the course of the year, so the second quarter is also likely to be elevated. But again, that depends on the timing of know, several factors with which are hard to predict with any precision. The other swing factor I would mention with is related to the quarterly cadence. Four supplemental payments, the net supplemental payments, including the associated taxes. And those can be lumpy and, as you know, hard to predict with precision. But what our guidance assumes is that first-quarter supplemental payments will be down about $10 million to $15 million year over year. But they will be up for the full year. I would suggest for modeling purposes, you assume second-quarter net supplemental payments are down year over year as well.

Yep. Thanks. The next question is from Brian Tanquilut with Jefferies. Please go ahead.

Hey. Good morning. Maybe, Heather, just to drill down and see some of the comments you made on the longer-term growth algorithm or growth outlook. Just curious, I mean, as we think about 10% bed ads the past few years, and a soft comp in 2025, and I know you said high end of the range in 2026. So shouldn't that be higher than that 8% to 10% range, number one, and how should we be thinking about the margin and pricing assumption that you have your post-2025.

Yeah. Hi. Thanks for the question. I'll just maybe start by reiterating a couple of things. The revenue growth at 7% to 9% for those several years beginning in beginning after this year and EBITDA growth of 8% to 10%. So to your question about how should we feel about margin and margin expansion, just to point out the delta and those two numbers that we've headlined. And I'll just point out one more thing. We would expect 2026 to be at the high end of that range you know, based on all the things that that I just talked to in response to the Whit question. A little bit more granularity, you know, we'd expect volume growth to be in the mid-single-digit range on average, and that pulls in you know, the beds that we're adding, of course, and, you know, to answer that question that you asked, as we said in the past, you know, we'd expect average rates to normalize back towards the historical low to mid-single-digit range. At some point in the future, and our long-term outlook assumes we see rate growth in that area. That doesn't mean that we won't have years when we outperform. As I mentioned, 2026, we're gonna be at the high end of that range. But our base case is saying that we see a more normalized growth rate than, you know, the prudent approach and leaves room, you know, for conservatism and for us to outpace that. Maybe just stepping stepping back a little bit higher level. That was a lot of granular detail. Just wanna say a couple of things about the long-term guide. You know, nothing has changed with how we're thinking about the opportunity here. The strategy that we have in terms of, you know, meeting that…

I appreciate that. And my follow-up is I think about Q1, there's a lot of chatter about whether whether it's a Fine. Fire issues in California or snowstorms. Just curious what you're seeing in terms of that, and then kinda like if you can share the same store assumptions that you baked into that Q1 guide just out of curiosity.

What why don't I just maybe give you a little bit of color on the bridge in general just to address that and then any sort of knock-on questions here. Just for clarity. So for Q1, you know, I'll start with startup costs. I mentioned this but I'll just reiterate in terms of Q1 specifically here to be complete. We expect about $15 million in higher startup costs versus the first quarter of 2024. And we expect that to be to the high watermark for the year. In terms of supplemental payment, the first quarter will be down around $10 to $15 million year over year due to timing. And recall that we had $7 million in out-of-period payments in the first quarter last year. We mentioned in our press release that we had a facility closure right at the beginning of Q1. That's about a $5 million drag to Q1 for 2025. Our 2025 outlook does not assume a material improvement on those handful of underperforming facilities. And it's difficult for us to put an estimate on the timing for the turnaround of a small group of facilities. And so we believe it's more prudent just to take a conservative approach when we're setting guidance. So 2025, as a result of that, assumes roughly a $20 million EBITDA headwind for the full year from that handful of underperforming facilities. And just to directly to your question, it's not specifically related to, you know, fires or any of the other events there. There's, you know, normal seasonality with weather, of course, always in Q1, but nothing that I would call out here. It's just focused on those few facilities. One point on that. You know, the year-over-year headwinds would be spread over the first three quarters of the year, just as a reminder, because the fourth quarter would already have been impacted in 2024, and so we should see a tailwind as we comp over the fourth quarter of 2024 results. So that's a total of $20 million in the year, but really distributed to the first three quarters. And then starting in Q1. One last thing that we haven't talked about that I'll just mention for completeness as I'm going through the bridge for Q1 is professional liability expense. You would have seen that we took a charge in Q4, and we're also we for 2025, an incremental $10 million year over year for the full year. So, obviously, there's gonna be a piece of that in Q1 as well. That's a reflection of what we believe is a more conservative approach to reserve claims this year.

Awesome. Thank you.

The next question comes from AJ Rice with UBS. Please go ahead.

Thanks. Hi, everyone. So in Q4, I think the revenue per day moderated growth to 1.7% and then 3.6% in Q3, which is more like what it was for the full year. And you're calling out low single-digit pricing growth for 2025. I'm just trying to understand. I know there's some moving parts, and maybe that's impacting you more than is apparent. But is that something you're seeing? Rates come down on the Medicaid side, on the commercial side, or otherwise or rate growth rather moderate? Or are you just giving yourself the leeway that it could moderate?

Yeah. Hi. Hi, AJ. Thanks for the question. Maybe I'll just go through a little bit of detail on the rates and what we're thinking about when we go. First, I just wanna I've said it a couple of times that I think it bears saying again, you know, the 2025 guidance. The same supplemental payments will be flat to up $15 million for this year. So the 2025 guidance essentially assumes we'll get a little less of a tailwind relative to the years past. The timing and the magnitude of those payments can be very difficult to predict. And if that improves, then we have more visibility or timing then we will see upside. And that could be, you know, it's a positive swing factor for us and the reported revenue per day. And the second thing I would say is given the noise on the policy front, we just believe it's prudent. At this early point in the year. Incorporate a more conservative approach and are thinking about rate updates given the broader environment. There's nothing specific on the horizon that we're seeing as concerning. But we have taken a slightly more cautious approach as we think about 2025 given the level of uncertainty policy front. If this level of conservatism proves unnecessary, then rate growth could wind up closer to the mid-single-digit range. And then maybe finally just to round it out from an overall rate perspective, we're assuming the commercial rate environment remains stable.

Okay. And then for my follow-up, looking at the different margin dynamics, I know again there's a lot of moving parts. I think fourth quarter you were 19.8%. That gave you the full-year EBITDA margin about 22.5%. I think for the last five years prior to that, you've been more like 23.3%. If I look at peel away what you're saying about liability and those cluster of facilities that are underperforming. What are you assuming in 2025 that your core portfolio does in margin? It's stable? Is it down? And if I look at the implied growth going out a couple of years, I think we sort of back of the envelope get to about 21.5%. Percent for 2028, which is below the five-year prior. Are you thinking that you can't the margin of the last five years is probably higher than you're gonna see for quite a while. So essence of it what's the assumption for the underlying portfolio actually? The callouts for 2025 and is assumption that that that margin in the last five years is is a couple hundred basis points higher than what you're likely to get to even a couple of years from now.

Okay, AJ. Let me try to answer that. So I would point to a couple of things at a very high level me just talk about a couple of things. You talked about Q4 2024 and the impact full year. And then moving into 2025, what do we expect and pointing to specifically that margin compression. You know, Q4 margin was you know, very specifically, a result of two things that was the additional reserve for the professional liability reserve. And disclosure of ability in the quarter. So that's what drove that, and obviously, it impacted the full year as well. As we think about 2025. I would just point out to a couple of things and we'll deliver these. But, you know, we got the startup cost, and we have the continuation of the professional liability expense that we are assuming a higher rate for 2025. That's about $10 million over 2024. And then when we look at volume, you know, we're not expecting a material improvement, as I said, in those few facilities, and we're just trying to be prudent make a conservative approach when we set the guidance and that is giving us about a $20 million headwind to EBITDA for 2025. If those items that I'm calling out improve? Then we will have upside and we will have a tailwind as we move throughout the year. But we just felt it was better to be more cautious at this. To your question of what's the underlying business. Look like from a margin perspective, we see that as stable. It's just these few things that we're calling out specifically on top, but the underlying business we see is continuing to be stable in the range that we've seen historically.

Okay. Alright. Thank you.

The next question comes from Ben Hendrix with RBC Capital Markets. Please go ahead.

Hey. Thank you very much. Last quarter, you talked a lot about depressed referral activity on the back of some difficult press headlines last year. Can you give us an update on how your referral activity has progressed across your various service lines in 2025? And then how should that impact the pacing we should expect through the year of your low to mid-single-digit same-store volume growth that you've put in the guidance. Thanks.

Thanks, Ben. This is Chris. Why don't I start and maybe Heather can add some commentary as well. You know, I would say just on the referral source front that just continue to be very engaged with outreach to all our external stakeholders, you know, including all these key referral sources and other important partners, we have been very, very intentional about consistent outreach really to correct any of the misunderstandings that were created from the media reporting. And as we've consistently emphasized for them the quality of the care that we provide, the and over the last two years that we continue to make we think that that is resonating. We have put particular focus on ensuring that our most important referral sources do understand the facts and we've know, clearly put some commentary on our website that I think has a lot of detail that is then very well received. And so when you just look across, aren't facility base, the referral issue continues to be less and less of a challenge, and it allows us to focus on the smaller number of facilities that Heather referenced are still performing below our expectation right now. So, Heather, anything you would add?

You know, just maybe to double down on a couple of things there, Chris. You know, we talked about back in January that majority of the headwinds were coming from a handful of facilities. And that began in Q4. As Chris mentioned, you know, we are just continuing to work through the process and turning around the small group of facilities. But, you know, I would just note as well that, you know, in the portfolio of this size in any period, we're gonna have some that's overperform and some that underperform. And spent the last several months just really getting to understand the referral pattern issue and mitigate it where appropriate. And we're at a point now where if you look across our entire book of business, we feel good that referrals are not a widespread issue. As I noticed, we're focused on, you know, the small number of facilities that are performing below our expectations.

Thank you.

The next question comes from John Ransom with Raymond James. Please go ahead.

Hey. Good morning. As we look out to 2026 and beyond, the mix of bed ad you know, it's crept up in terms of de novos versus facility ads. What does that look like in the out years?

Hi, John. Good morning. As we look out in the out years, I think we'll continue to be focused on de novos. Some of those JV partners just based on the pipeline that we have as well. But I would say de novo facilities heavily focused in the acute base.

So our math is that, you know, the construction costs have gone up probably a third. Or so since the plan was laid out by the old management team in 2021. So you know, unless the returns have improved, it looks like to us, like, the EBITDA returns are a look maybe 10% range. So I just didn't didn't know, is there a rethinking of the de novo map that was do all these projects still make sense and kinda lie to the current environment?

So no no. I don't think there's anything anything there to talk about in terms of the profitability or sort of the returns expectations for those facilities. I mean, it's clear that we have multiple options of how to deploy capital and we you know, we apply a very rigorous approach that we've talked about many times before. We are, you know, constantly looking at those returns. We're making sure that we have our models updated for the right information and we continue to see, you know, the benefit. Those hospitals, those de novo's that we're adding. And, you know, we have seen nice returns over the last several years. We've seen rate improvement we've seen that really contribute to volume. And I think we will con we'll see that in a big way in 2026. Whenever we see whenever we see that happening. So whenever we see the cost of construction, you know, the construction rate going up in some pockets, you know, that's what we feel confident about the rate growth that has kept up with that construction cost at the same time. So know, from a returns perspective, we still feel good about those returns.

Okay. Thank you. And just two more quick ones for me. You know, the MAT business, a bit in the quarter. We're, you know, we're seeing that single-digit growth number one, then number two, just going back to the question on referral patterns and underreporting are the ones that are left, are these mostly in the markets that were the subject of the media scrutiny, or are there other markets? Thank you.

So, you know, that that business, as you will recall, has grown substantially. Over the past you know, twelve, eighteen months, maybe even twenty-four months. And that is that experience great. Great growth. The growth rates we have expected would come down just as a comp over the prior years because of that significant growth. You know, there is know, a lot of strength in that business. We continue to see record volumes associated with that business. So there's nothing I would point to apart from just the normal growth pattern as we comp over periods of significant growth. We still see that as a strong business, and we think about it as a mid-single-digit grower for future periods.

The next question comes from Matthew Gillmor with Seabank. Please go ahead.

Hey. Thanks for the question. So for the underperforming facilities that you've called out, can you maybe just give us a sense for you know, what you're doing on the ground to improve the results there?

Yeah. Thanks, Matt. You know, I would start with health care as local. So for us, it really starts with a comprehensive review of the competitive landscape. We look really closely at the programming at that individual facility. And then know, as we really dig in and make an assessment on a specific facility, we're gonna look at a number of very specific factors. So one would be, you know, we'll look at the business development function. We'll look at the current funnel. We'll look at the referral sources. Identify any gaps in coverage and, you know, clearly work with the team don't wanna plan there. Gonna look really closely at admissions, and that can include inquiries. It can know, look at deflections and what's going on there. We're gonna do an assessment of the leadership team, not only quality of the team, but also any staffing needs and gaps related to that team. We'll look at technology. We've obviously invested heavily, but we wanna ensure that there's know, adherence and, you know, really strong adoption of the platforms that we've put in place from the remote monitoring technology to EMR to the patient safety and specifically the comprehensive quality dashboards that we put in place as well. So we wanna make sure that that is also in place. Then the final thing I would say is maybe just the physical plant. We would even look at, you know, are there any facility improvements that you know, would be an impediment. So it's a comprehensive suite of things that we're looking at working very closely with our operational leadership and getting very granular on the ground level.

Got it. And then as a follow-up, should we think about the drag from those facilities assuming there's no improvement over the near term, but that'd be a 2% drag kinda consistent with what you saw in the fourth quarter.

Yeah. That's that's about the right ballpark, Matt.

Thank you.

The next question comes from Scott Fidel with Stevens. Please go ahead.

Hi. Thanks. Good morning. First question, just, you know, wanted to get your your update around. I know that you had talked about you know, in the last few quarters that it you know, ultimately you saw sort of the volumes, you know, start to moderate a bit that, you would have flexibility to potentially flex down some of the labor, you know, staffing-related costs. You know, the full-year guidance does assume a bit lower of a, you know, a volume frame around it. So just curious sort of how are you guys thinking about, you know, that that option or lever. Doesn't seem like you have, you know, much embedded into the guidance around that, but you know, was hoping to get your sort of breakdown of some of the, you know, options you have around, you know, flexing down cost potentially.

Yeah. Hi. Thanks for the question. That's a good question. If you recall in Q4, when we brought the guide down related to, you know, the pressure that we were seeing, we brought the EBITDA guide down disproportionately higher than the revenue guide. And that implied about a $15 million EBITDA headwind for Q4 of 2024. As we think about 2025, we are anticipating for that same small group of facilities, about $20 million of a headwind built into 2025. So to your question of it have we started to focus on, you know, cost levers and rightsizing the cost structure? Yes. It's $15 million for one quarter alone versus $20 million for the full year. Is factoring in the cost measures that we are taking and the things that we're doing in relation to those facilities. Just as a reminder, we have not built in any upside expectations from a volume perspective for that handful of facilities. For the year. But if those facilities were to begin to turn around and the volume improved, that would, of course, be upside and the tailwind for us as we move throughout the year. But at this point, because the timing is hard to predict, on those facilities or any facility that we're working on, we thought it was more prudent to take a cautious approach.

Okay. And then as my follow-up, wanted to know whether, you know, as you've announced, you know, or the board announced that $300 million expansion of the buyback program, whether there's any type of methodical inputs or sort of framing that that you're going to be approaching this around, you know, in terms of of sort of about, you know, like a maximum leverage, you know, target that you'd be willing to go to. To fund buybacks, you know, as compared to comparing against sort of, you know, the current valuation and pressure in the stock. And then on that front, you know, maybe if you wanna just know, give us some clarity around you know, what you're thinking would be the maximum leverage of, you know, given the increase to the revolver, you know, that you have, you know, accessible to fund you know, some of the negative free cash flow in the projects. That you have until you get to 2026 where FCS is expected to improve.

Thanks, Scott. This is Chris. I'll go ahead and start and see if Heather wants to add anything. You know, I would just start by saying, I mean, we have this authorization that's been approved by the board in place and it was clearly deliberately put in place to utilize and we're planning to do so. We're not gonna comment on any specific timeline, but I think right now from a leverage standpoint and Heather can chime in, we would expect to naturally delever as EBITDA grows over the next few years, and we talked about anticipating, you know, an inflection point with respect to free cash flow in 2026. And so, we'll what would you add from there?

I mean, that's the exact point that I would add. You know, if we think about, you know, to your point of effectively when and how would we fund and think about actually being in the market in terms of leverage. We have a comfortable leverage ratio and we are expecting that to come down naturally. To Chris' point, we've talked about 2026 being a significant growth year for us from an EBITDA perspective, and that will naturally bring that leverage back down. And then we think even beyond that, if you think about the CapEx reduction, that's gonna bring that leverage down as well. And so given that, we would be comfortable looking at, you know, taking up leverage in order to fund what we need to do from a share repurchase perspective.

Okay. Thank you.

The next question comes from Andrew Mok with Barclays. Please go ahead.

Hi. Good morning. Obviously, a lot of attention on state-directed payments lately. I think you can appreciate that investors wanna understand the risk to get comfortable around that area of concern. So can you disclose your total exposure to state-directed payments for us for 2024?

Yeah. Sure. Hi, Andrew. Good morning. Would be happy to. So the total gross supplemental payment would be less than $200 million. And that's, of course, before the provider taxes that we pay into those programs.

Okay. So about two-thirds of that is a good ballpark to think about in terms of net benefit.

I just wouldn't I wouldn't expect ours to be any different than that for the rest of the industry. That's pretty good ballpark.

Understood. And then I'm still struggling to understand how there could be a significant drop-off in revenue per patient day, but mid to low single-digit mid-single-digit to low single-digit. Especially when I think about fiscal year 2025 rates, carrying into the first half of calendar year 2025 and state supplementals being up overall? It seems like you're kind of pointing to state supplementals being the area of conservatism. But that seems to go against the philosophy of booking six quarters of Tennessee. So if state-directed payments are up overall. It feels like there's a moderation in either core rate or CTC revenue. Is there anything you can share that help might help reconcile these common?

Yeah. Let me hit on a couple of things. You know, the first, we've talked about, you know, supplemental payments that in prior years, they've been a nice tailwind for us and that it will be less of a tailwind certainly compared to the relative, you know, recent years. The second thing that I will just reiterate is that we feel that there is that it's the right thing to do to just be prudent at this point in the year just given everything that, you know, the noise that we're seeing, we feel like it's better to take a conservative approach and, you know, certainly there will be upside there. If our conservative approach is and it should've proven wrong. And then just directly to your question regarding CTC, you know, that service line delivered know, above trend growth obviously in 2023 and early 2024. And that was a tailwind of about 100 basis points to our growth in the early part of 2024 from a rate perspective. And that's just naturally is the growth rate. Moderates. Over the prior year comps, we would see that become less of a tailwind. In 2025, we wouldn't expect that service line to be a material swing factor in either direction. It's just not the tailwind that we had early in 2024.

Thank you.

This concludes our question and answer session. I would now like to turn the call back over to Mr. Hunter for closing remarks.

Thank you. In closing, I wanna again thank our committed facility leaders, clinicians, and over 25,000 dedicated employees across the country who've continued to work tirelessly to meet the needs of patients in a safe, and effective manner. We have a strong foundation and a proven strategy for driving growth and delivering greater value to both the patients we serve and our shareholders. Thank you for being with us this morning and for your interest in Acadia. Have a great day.

The conference has now concluded. Thank you for your participation. You may now disconnect your lines.