We're pleased with our progress to date in 2025 as we continue to execute our strategy in line with our growth objectives. 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.
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. More broadly, volumes in our acute care business came in slightly below expectations, while demand across the majority of our business remains robust. Over the last two years, Heather has been instrumental in strengthening our financial foundation and advancing our growth strategy. 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. 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.
| Metric | Period | Current guidance |
|---|---|---|
| Full-year Adjusted EBITDA | FY2025 | $675M-$700M (updated) |
| Full-year same-facility volume growth | FY2025 | 2%-3% (lowered) |
| Full-year startup losses | FY2025 | $60M-$65M (raised ~$10M) |
| Full-year total beds added | FY2025 | 950-1,000 (raised at midpoint) |
| Full-year net Medicaid supplementals | FY2025 | +$30M-$40M (raised) |
| Metric | YoY | Note |
|---|---|---|
| Total revenue | +9.2% to $869.2M | solid top-line growth in line with growth objectives |
| Adjusted EBITDA | +7.5% to $201.8M | revenue growth, including Tennessee supplemental benefit, partly offset by higher startup losses and softer Medicaid volumes |
| Same-facility revenue | +9.5% | 7.5% increase in revenue per patient day and 1.8% growth in patient days |
| Same-facility patient days | +1.8% | weaker Medicaid acute volumes, slightly below expectations |
| Acute commercial and Medicare volumes | +9% and +8% | managed care team securing commercial and Medicare contracts to diversify payer mix |
| Startup losses | $14.2M vs $4.6M prior year | accelerated facility opening pace |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Medicaid acute volumes | robust demand assumed | weaker Medicaid acute volumes from evolving managed Medicaid utilization patterns and elevated cost pressures | Softening |
| Supplemental payments | flat to up $15M expected | Tennessee program approved; net supplementals now +$30M-$40M with $40-$45M recurring run-rate | Improving |
| Capital allocation | build up to 1,000 beds in 2025 | taking a harder look at the pipeline; two facilities paused saving over $100M in CapEx, potentially accelerating free cash flow positive ahead of end-2026 | Tightening |
| Labor | high watermarks a few years back | wage growth down to ~3.5%, reduced premium costs and stability | Improving |
| Government investigations | ongoing DOJ and SEC cooperation | ~$54M spent in Q2, much of the independent review done in first half, reduction expected in second half | Expected to moderate |
| Underperforming facilities | ~$20M full-year EBITDA headwind assumed | running ~$3M worse, driven by one facility with local media pressure | Slightly worse |