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- **Q3 Results**: Revenue growth (+4.4%) offset by EBITDA decline (-11.3%) due to Medicaid volume softness and cost pressures.
- **Strategic Shifts**: $300M+ CapEx reduction for 2026, 5 facility closures, and 500-700 new beds planned for next year.
- **Quality Focus**: 6 consecutive quarters of improved retention, 50+ clinical KPIs tracked, and JV facility showing 47% reduction in depressive symptoms.
- **2025 Outlook**: Adjusted EBITDA revised to $650-660M, with 2026 targeting positive free cash flow.
- **Risks**: Medicaid rate pressure, PLGL expenses, and delayed CMS payments weighing on margins.

**【Management Opening Remarks】**
- Brian Farley provided an overview of the Q3 2025 earnings release, emphasizing forward-looking statements and the importance of GAAP/non-GAAP reconciliations.
- Highlighted Todd Young's recent appointment as CFO and his experience in healthcare finance.

**【CEO Summary Section】**
- **Q3 2025 Results**: Revenue of $851.6 million (+4.4% YoY), Adjusted EBITDA of $173 million (-11.3% YoY) due to Medicaid volume softness and cost pressures.
- **Strategic Adjustments**: Paused $300M+ in CapEx for 2026, focusing on high-return markets; closed 5 underperforming facilities to optimize portfolio.
- **Growth Initiatives**: 500-700 new beds expected in 2026, including JV partnerships with Tufts Medicine and Orlando Health.
- **Quality Investments**: 6 consecutive quarters of improved employee retention; new quality dashboard tracks 50+ KPIs, driving clinical outcomes (e.g., 47% reduction in depressive symptoms at a JV facility).

**【CFO Financial Commentary】**
- **Q3 Financials**: GAAP net income of $42.3 million, Non-GAAP EPS of $0.85 (down 22% YoY). Adjusted EBITDA of $173 million missed internal expectations by $5 million due to bad debt and PLGL expenses.
- **Balance Sheet**: $118.7M cash, $790M available on $1B revolver; net leverage ratio of 3.4x.
- **2025 Outlook**: Revised Adjusted EBITDA guidance to $650-660M (prev. $675-700M), driven by Medicaid rate pressure and volume declines.
- **2026 Outlook**: Free cash flow expected for the full year, with startup losses declining 20-30% YoY.

**【Q&A Key Highlights】**
- **Payer Challenges**: Medicaid managed care plans increasing utilization reviews, leading to shorter lengths of stay and higher denials (e.g., 3%+ incremental bad debt expense).
- **Cost Controls**: Legal expenses down 28% QoQ to $39M; expects further reductions in 2026.
- **CapEx Discipline**: 2026 CapEx guidance of $300-400M (prev. $610-630M), with 150-250 new beds in 2027.
- **Supplemental Payments**: Up to $22M potential EBITDA boost from CMS programs, though timing uncertain due to government shutdown.
- **Free Cash Flow**: 2026 target of positive full-year FCF, driven by reduced CapEx and ramping new beds.


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