For legal entities where the Company has a financial relationship, the Company evaluates whether it has a variable interest and determines if the entity is considered a variable interest entity (“VIE”). If the Company concludes an entity is a VIE and the Company is the primary beneficiary, the entity is consolidated. The primary beneficiary analysis is a qualitative analysis based on power and benefits. A reporting entity has a controlling financial interest in a VIE and must consolidate the VIE if it has both power and benefits. It must have the power to direct the activities that most significantly impact the VIE’s economic performance and the obligation to absorb losses of the VIE that potentially could be significant to the VIE or the right to receive benefits from the VIE that potentially could be significant to the VIE.

At September 30, 2023, the Company operated ten facilities through non-wholly owned subsidiaries. The Company owns between approximately 65% and 87% of the equity interests of these entities, and noncontrolling partners own the remaining equity interests. The Company manages each of these facilities, is responsible for the day-to-day operations and, therefore, has the power to direct the activities that most significantly impact the VIE’s economic performance and the obligation to absorb losses or receive benefits from the VIE that could potentially be significant to the VIE. These activities include, but are not limited to, behavioral healthcare services, human resource and employment-related decisions, marketing and finance. The terms of the agreements governing each of the Company’s VIEs prohibit the Company from using the assets of each VIE to satisfy the obligations of other entities. Consolidated assets at September 30, 2023 and December 31, 2022 include total assets of variable interest entities of $535.8 million and $434.2 million, respectively, which cannot be used to settle the obligations of other entities. Consolidated liabilities at

September 30, 2023 and December 31, 2022 include total liabilities of variable interest entities of $25.5 million and $24.4 million, respectively.

The consolidated VIEs assets and liabilities in the Company’s condensed consolidated balance sheets are shown below (in thousands):


	September 30, 2023		December 31, 2022

Cash and cash equivalents	$	50,531	$	32,478
Accounts receivable, net		28,643		23,789
Other current assets		2,757		2,561
Total current assets		81,931		58,828
Property and equipment, net		387,159		313,358
Goodwill		42,384		39,564
Intangible assets, net		18,263		16,139
Operating lease right-of-use assets		6,034		6,284
Total assets	$	535,771	$	434,173


Accounts payable	$	6,419	$	4,650
Accrued salaries and benefits		6,531		6,866
Current portion of operating lease liabilities		263		233
Other accrued liabilities		6,044		6,179
Total current liabilities		19,257		17,928
Operating lease liabilities		6,232		6,433
Total liabilities	$	25,489	$	24,361