| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|---|-----------------------------------------------------------------------------------------|

| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|---|------------------------------------------------------------------------------------------|

|                                                                                    |                                |
|-----------------------------------------------------------------------------------------|-------------------------------------|
| Delaware                                                                                | 73-1650429                          |
| (State or other jurisdiction ofincorporation or organization)                           | (I.R.S. EmployerIdentification No.) |
|                                                                                    |                                |
| 20400 Stevens Creek Boulevard,Suite 600, Cupertino, California | 95014                               |
| (Address of principal executive offices)                                                | (Zip code)                          |

----

|          |                  |                                                                                                             |   | Page No. |    |
|---------------|-----------------------|------------------------------------------------------------------------------------------------------------------|--------|---------------|---------|
| Part I.  | Financial Information |                                                                                                             |   |          |
|          | Item 1.          | Financial Statements (Unaudited)                                                                                 |   |          |    |
|          |                  | Condensed Consolidated Balance Sheets as of June 30, 2009 and December 31, 2008                             |   |          | 2       |   |
|          |                  | Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2009 and 2008        |   |          | 3       |   |
|          |                  | Condensed Consolidated Statement of Changes in Equity for the six months ended June 30, 2009 and 2008  |   |          | 4       |   |
|          |                  | Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2009 and 2008             |   |          | 5       |   |
|          |                  | Notes to Condensed Consolidated Financial Statements                                                             |   |          |  6 |   |
|          | Item 2.               | Management's Discussion and Analysis of Financial Condition and Results of Operations                            |   |          | 27      |   |
|          | Item 3.               | Quantitative and Qualitative Disclosure About Market Risk                                                        |   |          | 32      |   |
|          | Item 4.          | Controls and Procedures                                                                                          |   |          | 32      |   |
|          |                  |                                                                                                             |   |          |    |
| Part II. | Other Information     |                                                                                                             |   |          |    |
|          | Item 1A.         | Risk Factors                                                                                                     |   |          | 33      |   |
|          | Item 6.               | Exhibits                                                                                                         |   |          | 33      |   |
| Signature     |                  |                                                                                                             | 34     |          |
| Exhibit Index |                  |                                                                                                             | 35     |          |

----

CRC HEALTH CORPORATION

|                                                                                                                               |   | June 30, 2009 |          |   | Dec. 31, 2008 |   |
|------------------------------------------------------------------------------------------------------------------------------------|--------|---------------|---------------|--------|---------------|--------|
| ASSETS                                                                                                                             |   |          |          |   |          |   |
| CURRENT ASSETS:                                                                                                                    |   |          |          |   |          |   |
| Cash and cash equivalents                                                                                                          |   | $             | 15,517        |   |          | $      | 2,540 |   |
|         Restricted cash                                                                         |   |          | 1,521         |   |          |   | - |   |
| Accounts receivable, net of allowance for doubtful accounts of $5,284 in 2009 and $5,409 in 2008                                   |   |          | 32,531        |   |          |   | 30,826 |   |
| Prepaid expenses                                                                                                                   |   |          | 6,414         |   |          |   | 7,703 |   |
| Other current assets                                                                                                               |   |          | 1,023         |   |          |   | 1,618 |   |
| Deferred income taxes                                                                                                              |   |          | 4,029         |   |          |   | 4,029 |   |
| Current assets of discontinued operations, facility exits                                                                          |   |          | 14,897        |   |          |   | 14,125 |   |
| Total current assets                                                                                                               |   |          | 75,932        |   |          |   | 60,841 |   |
| PROPERTY AND EQUIPMENT-Net                                                                                                         |   |          | 126,225       |   |          |   | 129,728 |   |
| GOODWILL                                                                                                                           |   |          | 603,981       |   |          |   | 604,078 |   |
| INTANGIBLE ASSETS-Net                                                                                                              |   |          | 349,066       |   |          |   | 354,463 |   |
| OTHER ASSETS                                                                                                                       |   |          | 18,425        |   |          |   | 20,065 |   |
| TOTAL ASSETS                                                                                                                       |   | $             | 1,173,629     |   |          | $      | 1,169,175 |   |
| LIABILITIES AND EQUITY                                                                                                             |   |          |          |   |          |   |   |   |
| CURRENT LIABILITIES:                                                                                                               |   |          |          |   |          |   |   |   |
| Accounts payable                                                                                                                   |   | $             | 5,402         |   |          | $      | 6,165 |   |
| Accrued liabilities                                                                                                                |   |          | 38,598        |   |          |   | 29,061 |   |
| Income taxes payable                                                                                                               |   |          | 824           |   |          |   | 1,201 |   |
| Current portion of long-term debt                                                                                                  |   |          | 6,145         |   |          |   | 6,522 |   |
| Other current liabilities                                                                                                          |   |          | 32,857        |   |          |   | 31,657 |   |
| Current liabilities of discontinued operations, facility exits                                                                     |   |          | 644           |   |          |   | 703 |   |
| Total current liabilities                                                                                                          |   |          | 84,470        |   |          |   | 75,309 |   |
| LONG-TERM DEBT-Less current portion                                                                                                |   |          | 636,110       |   |          |   | 646,630 |   |
| OTHER LONG-TERM LIABILITIES                                                                                                        |   |          | 7,566         |   |          |   | 7,553 |   |
| OTHER LONG-TERM LIABILITIES OF DISCONTINUED OPERATIONS, FACILITY EXITS                                                             |   |          | 1,796         |   |          |   | 1,909 |   |
| DEFERRED INCOME TAXES                                                                                                              |   |          | 134,234       |   |          |   | 134,331 |   |
| Total liabilities                                                                                                                  |   |          | 864,176       |   |          |   | 865,732 |   |
| COMMITMENTS AND CONTINGENCIES (Note 11)                                                                                            |   |          |          |   |          |   |   |   |
| EQUITY:                                                                                                                            |   |          |          |   |          |   |   |   |
| CRC HEALTH CORPORATION STOCKHOLDER'S EQUITY:                                                                                       |   |          |          |   |          |   |   |   |
| Common stock, $0.001 par value-1,000 shares authorized; 1,000 shares issued and outstanding at June 30, 2009 and December 31, 2008 |   |          | -             |   |          |   | - |   |
| Additional paid-in capital                                                                                                         |   |          | 447,733       |   |          |   | 444,275 |   |
| Accumulated deficit                                                                                                                |   |          | (133,628      | )      |          |   | (134,764 | ) |
| Accumulated other comprehensive (loss)                                                                                        |   |          | (4,749        | )      |          |   | (6,289 | ) |
| Total CRC Health Corporation stockholder's equity                                                                                  |   |          | 309,356       |   |          |   | 303,222 |   |
| NONCONTROLLING INTEREST                                                                                                       |   |          | 97            |   |          |   | 221 |   |
| Total equity                                                                                                                       |   |          |  309,453 |   |          |   | 303,443 |   |
| TOTAL LIABILITIES AND EQUITY                                                                                                       |   | $             | 1,173,629     |   |          | $      | 1,169,175 |   |

----

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

|                                                                                                                                                                                                                  |   | Three Months Ended June 30, 2009 |    |   | Three Months Ended June 30, 2008 |   |    | Six Months Ended June 30, 2009 |   |   | Six Months Ended June 30, 2008 |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------|---------|--------|---------------------------------------|--------|---------|-------------------------------------|--------|--------|-------------------------------------|--------|
| NET REVENUE:                                                                                                                                                                                                          |   |                                  |    |   |                                  |   |    |                                |   |   |                                |   |
| Net client service revenue                                                                                                                                                                                            |   | $                                     | 109,488 |   |                                  | $      | 118,067 |                                |   | $      | 213,449                             |   |   | $ | 230,020 |   |
| Other revenue                                                                                                                                                                                                    |   |                                  | 1,879   |   |                                  |   | 2,009   |                                |   |   | 3,767                               |   |   |   | 3,979 |   |
| Total net revenue                                                                                                                                                                                                     |   |                                  | 111,367 |   |                                  |   | 120,076 |                                |   |   | 217,216                             |   |   |   | 233,999 |   |
| OPERATING EXPENSES:                                                                                                                                                                                                   |   |                                  |    |   |                                  |   |    |                                |   |   |                                |   |   |   |   |   |
| Salaries and benefits                                                                                                                                                                                                 |   |                                  | 55,719  |   |                                  |   | 59,367  |                                |   |   | 113,162                             |   |   |   | 118,723 |   |
| Supplies, facilities and other operating costs                                                                                                                                                                        |   |                                  | 31,588  |   |                                  |   | 34,881  |                                |   |   | 63,077                              |   |   |   | 68,258 |   |
| Provision for doubtful accounts                                                                                                                                                                                       |   |                                  | 1,551   |   |                                  |   | 1,607   |                                |   |   | 3,084                               |   |   |   | 3,258 |   |
| Depreciation and amortization                                                                                                                                                                                         |   |                                  | 5,652   |   |                                  |   | 5,706   |                                |   |   | 11,410                              |   |   |   | 11,166 |   |
| Total operating expenses                                                                                                                                                                                              |   |                                  | 94,510  |   |                                  |   | 101,561 |                                |   |   | 190,733                             |   |   |   | 201,405 |   |
| OPERATING INCOME                                                                                                                                                                                                      |   |                                  | 16,857  |   |                                  |   | 18,515  |                                |   |   | 26,483                              |   |   |   | 32,594 |   |
| INTEREST EXPENSE, NET                                                                                                                                                                                                 |   |                                  | (11,866 | )      |                                  |   | (12,505 | )                                   |   |   | (23,818                             | )      |   |   | (27,022 | ) |
| OTHER INCOME (EXPENSE)                                                                                                                                                                                                |   |                                  | -       |   |                                  |   | 1,585   |                                |   |   | (82                                 | )      |   |   | (33 | )  |
| INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES                                                                                                                                                                 |   |                                  | 4,991   |   |                                  |   | 7,595   |                                |   |   | 2,583                               |   |   |   | 5,539 |   |
| INCOME TAX EXPENSE                                                                                                                                                                                                    |   |                                  | 2,372   |   |                                  |   | 3,207   |                                |   |   | 178                                 |   |   |   | 2,266 |   |
| INCOME FROM CONTINUING OPERATIONS, NET OF TAX                                                                                                                                                                         |   |                                  | 2,619   |   |                                  |   | 4,388   |                                |   |   | 2,405                               |   |   |   | 3,273 |   |
| LOSS FROM DISCONTINUED OPERATIONS (net of tax benefit of ($119) and ($365) in the three months ended June 30, 2009 and 2008, and ($768) and ($743) in the six months ended June 30, 2009 and 2008, respectively) |   |                                  | (288    | )      |                                  |   | (685    | )                                   |   |   | (1,388                              | )      |   |   | (1,397 | ) |
| NET INCOME                                                                                                                                                                                                       |   |                                  | 2,331   |   |                                  |   | 3,703   |                                |   |   | 1,017                               |   |   |   | 1,876 |   |
| LESS: NET INCOME (LOSS) ATTRIBUTABLE TO THE NONCONTROLLING INTEREST                                                                                                                                              |   |                                  | 9       |   |                                  |   | (54     | )                                   |   |   | (119                                | )      |   |   | (357 | ) |
| NET INCOME ATTRIBUTABLE TO CRC HEALTH CORPORATION                                                                                                                                                                |   | $                                     | 2,322   |   |                                  | $      | 3,757   |                                |   | $      | 1,136                               |   |   | $ | 2,233 |   |
|                                                                                                                                                                                                                  |   |                                  |    |   |                                  |   |    |                                |   |   |                                |   |   |   |   |   |
|                                                                                                                                                                                                                  |   |                                  |    |   |                                  |   |    |                                |   |   |                                |   |   |   |   |   |
| AMOUNTS ATTRIBUTABLE TO CRC HEALTH CORPORATION:                                                                                                                                                             |   |                                  |    |   |                                  |   |    |                                |   |   |                                |   |   |   |   |   |
| INCOME FROM CONTINUING OPERATIONS, NET OF TAX                                                                                                                                                                         |   | $                                     | 2,610   |   |                                  | $      | 4,451   |                                |   | $      | 2,520                               |   |   | $ | 3,639 |   |
| DISCONTINUED OPERATIONS, NET OF TAX                                                                                                                                                                                   |   |                                  | (288    | )      |                                  |   | (694    | )                                   |   |   | (1,384                              | )      |   |   | (1,406 | ) |
| NET INCOME ATTRIBUTABLE TO CRC HEALTH CORPORATION                                                                                                                                                           |   | $                                     | 2,322   |   |                                  | $      | 3,757   |                                |   | $      | 1,136                               |   |   | $ | 2,233 |   |

----

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)

|                                                                                      |   |   |    |   |                 |   |   | CRC Health's Corporation Stockholder's Equity |   |   |                                   |   |
|-------------------------------------------------------------------------------------------|--------|--------|---------|--------|----------------------|--------|--------|-----------------------------------------------|--------|--------|----------------------------------------|--------|
|                                                                                      |   | Total  |    |   | Comprehensive Income |   |   | Accumulated (Deficit) Retained Earnings       |   |   | Accumulated Other Comprehensive (Loss) |   |   | Common Stock |   |   | Additional Paid-in Capital |   |   | Noncontrolling Interest |   |
| Beginning balance                                                                         |   | $      | 303,443 |   |                 | $      | -      |                                          |   | $      | (134,764                               | )      |   | $ | (6,289 | ) |   | $ | - |   |   | $ | 444,275 |   |   | $ | 221 |   |
| Noncontrolling interest buyout                                                            |   |   | (89     | )      |                 |   |   |                                          |   |   |                                   |   |   |   |   |   |   |   |   |   |   |   | (84 | ) |   |   | (5 | ) |
| Comprehensive income:                                                                     |   |   |    |   |                 |   |   |                                          |   |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Net income for the six months ended June 30, 2009                       |   |   | 1,017   |   |                 |   | 1,017  |                                          |   |   | 1,136                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (119 | ) |
|    Other comprehensive income, net of tax:                                 |   |   |    |   |                 |   |   |                                          |   |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|          Unrealized gain on cash flow hedges |   |   | 1,540   |   |                 |   | 1,540  |                                          |   |   |                                   |   |   |   | 1,540 |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Other comprehensive income                                              |   |   | 1,540   |   |                 |   | 1,540  |                                          |   |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive income                                                                      |   |   | 2,557   |   |                 | $      | 2,557  |                                          |   |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Capital contributed by Parent, net                                                        |   |   | 3,542   |   |                 |   |   |                                          |   |   |                                   |   |   |   |   |   |   |   |   |   |   |   | 3,542 |   |   |   |   |   |
|    Ending balance                                                          |   | $      | 309,453 |   |                 |   |   |                                          |   | $      | (133,628                               | )      |   | $ | (4,749 | ) |   | $ | - |   |   | $ | 447,733 |   |   | $ | 97 |   |

|                                                                                      |   |   |    |   |                 |    |   | CRC Health's Corporation Stockholder's Equity |   |   |                                   |   |
|-------------------------------------------------------------------------------------------|--------|--------|---------|--------|----------------------|---------|--------|-----------------------------------------------|--------|--------|----------------------------------------|--------|
|                                                                                      |   | Total  |    |   | Comprehensive Income |    |   | Accumulated (Deficit) Retained Earnings       |   |   | Accumulated Other Comprehensive (Loss) |   |   | Common Stock |   |   | Additional Paid-in Capital |   |   | Noncontrolling Interest |   |
| Beginning balance                                                                         |   | $      | 446,123 |   |                 | $       | -      |                                          |   | $      | 7,141                                  |   |   | $ | - |   |   | $ | - |   |   | $ | 438,608 |   |   | $ | 374 |   |
| Comprehensive income:                                                                     |   |   |    |   |                 |    |   |                                          |   |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Net income for the six months ended June 30, 2008                       |   |   | 1,876   |   |                 |    | 1,876  |                                          |   |   | 2,233                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (357 | ) |
|    Other comprehensive income, net of tax:                                 |   |   |    |   |                 |    |   |                                          |   |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|          Unrealized loss on cash flow hedges |   |   | (352    | )      |                 |    | (352   | )                                             |   |   |                                   |   |   |   | (352 | ) |   |   |   |   |   |   |   |   |   |   |   |   |
|    Other comprehensive loss                                                |   |   | (352    | )      |                 |    | (352   | )                                             |   |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive income                                                                      |   |   | 1,524   |   |                 | $  | 1,524  |                                          |   |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Capital contributed by Parent, net                                                        |   |   | 1,998   |   |                 |    |   |                                          |   |   |                                   |   |   |   |   |   |   |   |   |   |   |   | 1,998 |   |   |   |   |   |
|    Ending balance                                                          |   | $      | 449,645 |   |                 |    |   |                                          |   | $      | 9,374                                  |   |   | $ | (352 | ) |   | $ | - |   |   | $ | 440,606 |   |   | $ | 17 |   |

----

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

|                                                                                                                                                                                                        |   | Six MonthsEndedJune 30,2009 |        |    | Six MonthsEndedJune 30,2008 |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------|-------------|---------|---------------------------------------|--------|
| CASH FLOWS FROM OPERATING ACTIVITIES:                                                                                                                                                                       |   |                                  |        |    |                                  |   |
| Net income                                                                                                                                                                                                  |   | $                                     | 1,017       |    |                                  | $      | 1,876 |   |
| Adjustments to reconcile net income to net cash provided by operating activities:                                                                                                                      |   |                                  |        |    |                                  |   |   |   |
| Depreciation and amortization                                                                                                                                                                               |   |                                  | 11,429      |    |                                  |   | 11,414 |   |
| Amortization of debt discount and capitalized financing costs                                                                                                                                               |   |                                  | 2,175       |    |                                  |   | 2,225 |   |
| Loss on interest rate swap agreement                                                                                                                                                                        |   |                                  | -           |    |                                  |   | 33 |   |
|                    Asset impairment                                                                               |   |                                  |  1,417 |    |                                  |   | - |   |
|                    Write-off of prior year paid acquisition costs                                            |   |                                  | 62          |    |                                  |   | - |   |
| Loss (gain) on disposition of property and equipment                                                                                                                                                        |   |                                  | 440         |    |                                  |   | (1 | ) |
|                    Gain on sale of discontinued operations                                                   |   |                                  | (24         | )       |                                  |   |  - |   |
| Provision for doubtful accounts                                                                                                                                                                             |   |                                  | 3,084       |    |                                  |   | 3,295 |   |
| Stock-based compensation                                                                                                                                                                                    |   |                                  | 2,788       |    |                                  |   | 2,303 |   |
| Deferred income taxes                                                                                                                                                                                       |   |                                  | (1,111      | )       |                                  |   | (1,029 | ) |
| Changes in assets and liabilities:                                                                                                                                                                          |   |                                  |        |    |                                  |   |   |   |
|                                 Restricted cash  |   |                                  | (1,521      | )       |                                  |   | - |   |
|     Accounts receivable                                                                                                                                                                      |   |                                  | (4,738      | )       |                                  |   | (3,015 | ) |
|                                 Prepaid expenses |   |                                  | 1,150       |    |                                  |   | (569 | ) |
| Income taxes receivable                                                                                                                                                                                     |   |                                  | 142         |    |                                  |   | 193 |   |
| Other current assets                                                                                                                                                                                        |   |                                  | 403         |    |                                  |   |      447 |   |
| Accounts payable                                                                                                                                                                                            |   |                                  | (799        | )       |                                  |   | (312 | ) |
| Accrued liabilities                                                                                                                                                                                         |   |                                  | 9,551       |    |                                  |   | 1,433 |   |
| Income taxes payable                                                                                                                                                                                        |   |                                  | (378        | )       |                                  |   | - |   |
| Other current liabilities                                                                                                                                                                                   |   |                                  | 3,788       |    |                                  |   | 2,616 |   |
| Other long term assets                                                                                                                                                                                      |   |                                  | (300        | )       |                                  |   | 42 |   |
| Other long term liabilities                                                                                                                                                                                 |   |                                  | (99         | )       |                                  |   | (120 | ) |
| Net cash provided by operating activities                                                                                                                                                         |   |                                  | 28,476      |    |                                  |   | 20,831 |   |
| CASH FLOWS FROM INVESTING ACTIVITIES:                                                                                                                                                                       |   |                                  |        |    |                                  |   |   |   |
| Additions of property and equipment                                                                                                                                                                         |   |                                  | (4,655      | )       |                                  |   |  (12,523 | ) |
| Proceeds from sale of property and equipment                                                                                                                                                                |   |                                  |  126   |    |                                  |   | 55 |   |
|         Proceeds from sale of discontinued operations                                                                                                                    |   |                                  | 475         |    |                                  |   | - |   |
| Acquisition adjustments                                                                                                                                                                                     |   |                                  | (59         | )  |                                  |   | (33 | ) |
| Payments made under earnout arrangements                                                                                                                                                                    |   |                                  | -           |    |                                  |   | (2,531 | ) |
| Net cash used in investing activities                                                                                                                                                                       |   |                                  | (4,113      | )       |                                  |   | (15,032 | ) |
| CASH FLOWS FROM FINANCING ACTIVITIES:                                                                                                                                                                       |   |                                  |        |    |                                  |   |   |   |
| Capital distributed to Parent                                                                                                                                                                          |   |                                  | (156        | )       |                                  |   | (305 | ) |
| Capitalized financing costs                                                                                                                                                                                 |   |                                  | (92         | )       |                                  |   | (136 | ) |
| Noncontrolling interest buyout                                                                                                                                                                         |   |                                  | (89         | )       |                                  |   | - |   |
| Repayment of capital lease obligations                                                                                                                                                                      |   |                                  | (7          | )       |                                  |   | (11 | ) |
| Net (repayments)/borrowings under revolving line of credit                                                                                                                                                  |   |                                  | (7,000      | )       |                                  |   | 4,000 |   |
| Repayments of long-term debt                                                                                                                                                                                |   |                                  | (4,042      | )  |                                  |   | (4,096 | ) |
| Net cash used in financing activities                                                                                                                                                                       |   |                                  | (11,386     | )       |                                  |   | (548 | ) |
| NET INCREASE IN CASH AND CASH EQUIVALENTS                                                                                                                                                              |   |                                  | 12,977      |    |                                  |   | 5,251 |   |
| CASH AND CASH EQUIVALENTS-Beginning of period                                                                                                                                                               |   |                                  | 2,540       |    |                                  |   | 5,118 |   |
| CASH AND CASH EQUIVALENTS-End of period                                                                                                                                                                     |   | $                                     | 15,517      |    |                                  | $      | 10,369 |   |

| SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING ACTIVITIES: |   |   |   |   |   |   |   |   |
|----------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|
| Payable for contingent consideration                     |   | $      | -      |   | $      |   | 416    |   |
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:        |   |   |   |   |   |   |   |   |
| Cash paid for interest                                   |   | $      | 21,997 |   | $      |   | 25,798 |   |
| Cash paid for income taxes, net of refunds               |   | $      | 757    |   | $      |   | 683    |   |

----

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

| 1. | BASIS OF PRESENTATION AND OVERVIEW |
|----|------------------------------------|

| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
|----|--------------------------------------------|

----

----

| 3. | BALANCE SHEET COMPONENTS |
|----|--------------------------|

|                                 |   | June 30, 2009 |         |   |  Dec. 31, 2008 |   |
|--------------------------------------|--------|---------------|--------------|--------|---------------------|--------|
| Accounts receivable-gross            |   | $             | 37,815       |   |                | $      | 36,235 |   |
| Less allowance for doubtful accounts |   |          | (5,284       | )      |                |   | (5,409 | ) |
| Accounts receivable-net              |   | $             | 32,531       |   |                | $      | 30,826 |   |
| Other assets:                        |   |          |         |   |                |   |   |   |
| Capitalized financing costs-net      |   | $             | 16,738       |   |                | $      | 18,688 |   |
| Deposits                             |   |          | 914          |   |                |   | 912 |   |
| Note receivable                      |   |          | 773          |   |                |   | 465 |   |
| Total other assets                   |   | $             | 18,425       |   |                | $      | 20,065 |   |
| Accrued liabilities:                 |   |          |         |   |                |   |   |   |
| Accrued payroll and related expenses |   | $             |  17,100 |   |                | $      | 7,864 |   |
| Accrued vacation                     |   |          | 5,604        |   |                |   | 5,613 |   |
| Accrued interest                     |   |          | 8,111        |   |                |   | 8,289 |   |
| Accrued expenses                     |   |          | 7,783        |   |                |   | 7,295 |   |
| Total accrued liabilities            |   | $             | 38,598       |   |                | $      | 29,061 |   |
| Other current liabilities:           |   |          |         |   |                |   |   |   |
| Deferred revenue                     |   | $             | 12,101       |   |                | $      | 10,249 |   |
| Client deposits                      |   |          | 8,504        |   |                |   | 5,114 |   |
| Insurance premium financing          |   |          | 627          |   |                |   | 2,226 |   |
| Interest rate swap liability         |   |          | 9,555        |   |                |   | 12,110 |   |
| Other liabilities                    |   |          | 2,070        |   |                |   | 1,958 |   |
| Total other current liabilities      |   | $             | 32,857       |   |                | $      | 31,657 |   |

| 4. | PROPERTY AND EQUIPMENT |
|----|------------------------|

|                          |   |  June 30, 2009 |    |   |  Dec. 31, 2008 |   |
|-------------------------------|--------|---------------------|---------|--------|--------------------------|--------|
| Land                          |   | $                   | 21,373  |   |                     | $      | 21,373 |   |
| Building and improvements     |   |                | 72,781  |   |                     |   | 65,733 |   |
| Leasehold improvements        |   |                | 23,028  |   |                     |   | 22,147 |   |
| Furniture and fixtures        |   |                | 12,251  |   |                     |   | 11,556 |   |
| Computer equipment            |   |                | 9,756   |   |                     |   | 9,474 |   |
| Computer software             |   |                | 11,235  |   |                     |   | 9,495 |   |
| Motor vehicles                |   |                | 5,944   |   |                     |   | 5,568 |   |
| Field equipment               |   |                | 2,815   |   |                     |   | 2,901 |   |
| Construction in progress      |   |                | 4,378   |   |                     |   | 12,013 |   |
|                          |   |                | 163,561 |   |                     |   | 160,260 |   |
| Less accumulated depreciation |   |                | (37,336 | )      |                     |   | (30,532 | ) |
| Property and equipment-net    |   | $                   | 126,225 |   |                     | $      | 129,728 |   |

----

| 5. | GOODWILL AND INTANGIBLE ASSETS |
|----|--------------------------------|

|                       |   | Recovery |      |   |  Healthy Living |   |    | Total  |   |
|----------------------------|--------|----------|-----------|--------|----------------------|--------|---------|--------|--------|
| Goodwill December 31, 2008 |   | $        | 501,531   |   |                 | $      | 102,547 |   |   | $ | 604,078 |   |
| Goodwill adjustments       |   |     |  (97 | )      |                 |   | -       |   |   |   | (97 | ) |
| Goodwill June 30, 2009     |   | $        | 501,434   |   |                 | $      | 102,547 |   |   | $ | 603,981 |   |

|                                                | June 30, 2009                                                 |   | December 31, 2008 |    |
|-----------------------------------------------------|---------------------------------------------------------------|--------|------------------------|---------|
|                                                | UsefulLife                                                    |   | GrossCarryingAmount    |    |   | AccumulatedAmortization |   |   | NetCarryingAmount |   | UsefulLife |   | GrossCarryingAmount |   |   | AccumulatedAmortization |   |   | NetCarryingAmount |   |
| Intangible assets subject to amortization:          |                                                          |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Referral network                                    | 20 years                                                 |   | $                      | 35,115  |   |   | $ | (4,617 | ) |   | $ | 30,498 |   |               20 years |   | $ | 35,914 |   |   | $ | (3,823 | ) |   | $ | 32,091 |   |
| Accreditations                                      | 20 years                                                      |   |                   | 16,118  |   |   |   | (2,125 | ) |   |   | 13,993 |   |               20 years |   |   | 16,118 |   |   |   | (1,722 | ) |   |   | 14,396 |   |
| Curriculum                                          | 20 years                                                      |   |                   | 8,486   |   |   |   | (1,114 | ) |   |   | 7,372 |   |               20 years |   |   | 8,743 |   |   |   | (929 | ) |   |   | 7,814 |   |
| Government including                                |                                                          |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Medicaid contracts                                  | 15 years                                                 |   |                   | 34,971  |   |   |   | (7,966 | ) |   |   | 27,005 |   |               15 years |   |   | 34,979 |   |   |   | (6,806 | ) |   |   | 28,173 |   |
| Managed care contracts                              | 10 years                                                      |   |                   | 14,400  |   |   |   | (4,920 | ) |   |   | 9,480 |   |               10 years |   |   | 14,400 |   |   |   | (4,200 | ) |   |   | 10,200 |   |
| Managed care contracts                              |          5 years |   |                   | 100     |   |   |   | (35 | ) |   |   | 65 |   |               5 years |   |   | 100 |   |   |   | (25 | ) |   |   | 75 |   |
| Core developed technology                           |          5 years |   |                   | 2,704   |   |   |   | (1,852 | ) |   |   | 852 |   |               5 years |   |   | 2,704 |   |   |   | (1,582 | ) |   |   | 1,122 |   |
| Covenants not to compete                            |          3 years |   |                   | -       |   |   |   | - |   |   |   | - |   |               3 years |   |   | 152 |   |   |   | (152 | ) |   |   | - |   |
| Total intangible assets subject to amortization:    |                                                          |   | $                      | 111,894 |   |   | $ | (22,629 | ) |   | $ | 89,265 |   |   |   | $ | 113,110 |   |   | $ | (19,239 | ) |   | $ | 93,871 |   |
| Intangible assets not subject to amortization:      |                                                          |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Trademarks and trade names                          |                                                          |   |                   |    |   |   |   |   |   |   | $ | 176,110 |   |   |   |   |   |   |   |   |   |   |   | $ | 176,587 |   |
| Certificates of need                                |                                                          |   |                   |    |   |   |   |   |   |   |   | 44,600 |   |   |   |   |   |   |   |   |   |   |   |   | 44,600 |   |
| Regulatory licenses                                 |                                                          |   |                   |    |   |   |   |   |   |   |   | 39,091 |   |   |   |   |   |   |   |   |   |   |   |   | 39,405 |   |
| Total intangible assets not subject to amortization |                                                          |   |                   |    |   |   |   |   |   |   |   | 259,801 |   |   |   |   |   |   |   |   |   |   |   |   | 260,592 |   |
| Total intangible assets                             |                                                          |   |                   |    |   |   |   |   |   |   | $ | 349,066 |   |   |   |   |   |   |   |   |   |   |   | $ | 354,463 |   |

----

| Fiscal Year                      |   |   |              |
|----------------------------------|--------|--------|-------------------|
| 2009 (remaining six months) |   | $      |  3,663  |    |
| 2010                             |   |   | 7,317        |   |
| 2011                             |   |   | 6,818        |   |
| 2012                             |   |   | 6,766        |   |
| 2013                             |   |   | 6,756        |   |
| Thereafter                       |   |   | 57,945       |   |
| Total                            |   | $      | 89,265       |   |

| 6. | INCOME TAXES |
|----|--------------|

----

| 7. | LONG-TERM DEBT |
|----|----------------|

|                                                                            |   | June 30, 2009 |    |   | Dec. 31, 2008 |   |
|---------------------------------------------------------------------------------|--------|---------------|---------|--------|---------------|--------|
| Term loan                                                                       |   | $             | 407,745 |   |          | $      | 409,841 |   |
| Revolving line of credit                                                        |   |          | 54,500  |   |          |   | 61,500 |   |
| Senior subordinated notes, net of discount of $1,738 in 2009 and $1,870 in 2008 |   |          | 175,558 |   |          |   | 175,426 |   |
| Seller notes                                                                    |   |          | 4,307   |   |          |   | 6,216 |   |
| Lessor financing, leasehold improvements                                        |   |          | 140     |   |          |   | 157 |   |
| Capital lease obligations                                                       |   |          | 5       |   |          |   | 12 |   |
| Total debt                                                                      |   |          | 642,255 |   |          |   | 653,152 |   |
| Less current portion                                                            |   |          | (6,145  | )      |          |   | (6,522 | ) |
| Long-term debt-less current portion                                             |   | $             | 636,110 |   |          | $      | 646,630 |   |

| 8. | DERIVATIVES |
|----|-------------|

----

|                                                | Asset Derivatives      |   | Liability Derivatives |   |
|-----------------------------------------------------|------------------------|--------|-----------------------|--------|
|                                                | Balance Sheet Location |   | Fair Value            |   | Balance Sheet Location |   | Fair Value |   |
| Derivatives designated as hedging instruments       |                   |   |                  |   |   |   |   |
| Interest Rate Swaps                                 | Other assets           |   | $                     | -      |   |  Other current liabilities |   | $ | 9,555  |   |
| Total derivatives designated as hedging instruments |                   |   | $                     | -      |   |   |   | $ | 9,555  |   |

| Derivatives in SFAS 133 Cash Flow Hedging Relationships |   | Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion) |   | Location of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) |                  | Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) |   | Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing) |   | Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing) |   |
|---------------------------------------------------------|--------|------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------|-----------------------|--------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------|--------|
| Interest Rate Swaps                                     |   | $                                                                            | (856   | )                                                                                            | Interest expense, net |                                                                                       | $      | (1,630                                                                                                                             | )      | Other income/expense                                                                                                             |   | $ | (192 | ) |

| Derivatives in SFAS 133 Cash Flow Hedging Relationships |   | Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion) |   | Location of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) |                  | Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) |   | Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing) |   | Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing) |   |
|---------------------------------------------------------|--------|------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------|-----------------------|--------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------|--------|
| Interest Rate Swaps                                     |   | $                                                                            | (586   | )                                                                                            | Interest expense, net |                                                                                       | $      | (3,140                                                                                                                             | )      | Other income/expense                                                                                                             |   | $ | (420 | ) |

----

| 9. | FAIR VALUE MEASUREMENTS |
|----|-------------------------|

| Level 1: | Quoted prices (unadjusted) in active markets for identical assets or liabilities;                                                                                                                   |
|---------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|          |                                                                                                                                                                                                |
| Level 2: | Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable;                                                                                          |
|          |                                                                                                                                                                                                |
| Level 3: | Unobservable inputs in which little or no market activity exists, therefore requiring an entity to develop its own assumptions about the assumptions that market participants would use in pricing. |

|   | Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis |
|--------|------------------------------------------------------------------------------|

|   | Non-Financial Assets and Liabilities |
|--------|--------------------------------------|

| Six Months Ended June 30, 2009   |   |
|------------------------------------------------------|--------|
|                                                 |   |   |   |   |   |   |   |   | Level Used to Determine New Cost Basis |   |
|                                                 |   |   | Impairment |   |   | New Cost |   |   | Level 1 |   |   | Level 2 |   |   | Level 3 |   |
|                                                 |   |   | Charge |   |   | Basis |   |   |   |   |   |   |   |   |   |   |
| Referral network                                     |   |   |  $ | 702 |   |   |   | - |   |   | $ | - |   |   | $ | - |   |   |  $ | - |   |
| Curriculum                                           |   |   |   | 227 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Regulatory licenses                                  |   |   |   | 315 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Trademarks and trade names                           |   |   | 173 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                 | Total  |   |  $ | 1,417 |   |   |   | - |   |   | $ | - |   |   | $ | - |   |   |  $ | - |   |
|                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|   | Fair Value of Financial Instruments |
|--------|-------------------------------------|

|                      |   | June 30, 2009   |    |   | December 31, 2008 |
|---------------------------|--------|-----------------|---------|--------|-------------------|
|                      |   | (in thousands)  |    |
|                      |   | Carrying Amount |    |   | Fair Value        |   |   | Carrying Amount |   |   | Fair Value |   |
| Assets                    |   |            |    |   |              |   |   |   |   |   |   |   |
| Loan program notes        |   |            | 320     |   |              |   | 321 |   |   |   | - |   |   |   | - |   |
| Total Assets              |   | $               | 320     |   |              | $ | 321 |   |   | $ | - |   |   | $ | - |   |
|                      |   |            |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities               |   |            |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Senior subordinated notes |   |            | 175,558 |   |              |   | 124,883 |   |   |   | 175,426 |   |   |   | 106,892 |   |
| Total Liabilities         |   | $               | 175,558 |   |              | $ | 124,883 |   |   | $ | 175,426 |   |   | $ | 106,892 |   |

| 10. | COMPREHENSIVE INCOME (LOSS) |
|-----|-----------------------------|

|                                                                          |   | Three Months Ended June 30, 2009 |   |   | Three Months Ended June 30, 2008 |   |   | Six Months Ended June 30, 2009 |   |   | Six Months EndedJune 30, 2008 |   |
|-------------------------------------------------------------------------------|--------|---------------------------------------|--------|--------|---------------------------------------|--------|--------|-------------------------------------|--------|--------|------------------------------------|--------|
| Net Income                                                                    |   | $                                     | 2,331  |   |                                  | $      | 3,703  |                                |   | $      | 1,017                              |   |   | $ | 1,876 |   |
| Other comprehensive income:                                                   |   |                                  |   |   |                                  |   |   |                                |   |   |                               |   |   |   |   |   |
| Net change in unrealized gain/(loss) on cash flow hedges (net of tax)         |   |                                  | 475    |   |                                  |   | (352   | )                                   |   |   | 1,540                              |   |   |   | (352 | ) |
| Other comprehensive income attributable to noncontrolling interest            |   |                                  | -      |   |                                  |   | -      |                                |   |   | -                                  |   |   |   | - |   |
| Total comprehensive income                                                    |   | $                                     | 2,806  |   |                                  | $      | 3,351  |                                |   | $      | 2,557                              |   |   | $ | 1,524 |   |
| Comprehensive income (loss) attributable to noncontrolling interest |   | $                                     | 9      |   |                                  | $      | (54    | )                                   |   | $      | (119                               | )      |   | $ | (357 | ) |
| Comprehensive income attributable to CRC Health Corporation                   |   | $                                     | 2,797  |   |                                  | $      | 3,405  |                                |   | $      | 2,676                              |   |   | $ | 1,881 |   |

| 11. | COMMITMENTS AND CONTINGENCIES |
|-----|-------------------------------|

----

| 12. | STOCK-BASED COMPENSATION |
|-----|--------------------------|

|                                       |   | Option Shares |      |   | Weighted-AverageExercisePricePer Share |   |   | Weighted-AverageRemainingContractual Term(In Years) |   |
|--------------------------------------------|--------|--------------------|-----------|--------|---------------------------------------------|--------|--------|----------------------------------------------------------|--------|
| Balance at December 31, 2008          |   |               | 7,310,873 |   |                                        | $      | 7.97   |                                                     |   |   | 7.44 |   |
| Granted                                    |   |               | 197,330   |   |                                        |   | 9.00   |                                                     |   |   | 9.71 |   |
| Exercised                                  |   |               | -         |   |                                        |   | -      |                                                     |   |   |   |   |
| Forfeited/cancelled/expired                |   |               | (240,679  | )      |                                        |   | 8.59   |                                                     |   |   |   |   |
| Outstanding-June 30, 2009                  |   |               | 7,267,524 |   |                                        | $      | 7.98   |                                                     |   |   | 7.01 |   |
| Exercisable-June 30, 2009                  |   |               | 3,084,008 |   |                                        | $      | 6.01   |                                                     |   |   | 6.75 |   |
| Exercisable and expected to be exercisable |   |               | 6,904,148 |   |                                        | $      | 7.98   |                                                     |   |   | 7.01 |   |

| 13. | CONDENSED CONSOLIDATING FINANCIAL INFORMATION |
|-----|-----------------------------------------------|

----

|                                                                   |   | CRC HealthCorporation |        |   | SubsidiaryGuarantors |   |         | SubsidiaryNon-Guarantors |   |   | Eliminations |   |   | Consolidated |       |
|------------------------------------------------------------------------|--------|-----------------------|-------------|--------|----------------------|--------|--------------|--------------------------|--------|--------|--------------|--------|--------|--------------|------------|
| ASSETS                                                                 |   |                  |        |   |                 |   |         |                     |   |   |         |   |   |         |       |
| CURRENT ASSETS:                                                        |   |                  |        |   |                 |   |         |                     |   |   |         |   |   |         |       |
| Cash and cash equivalents                                              |   | $                     | -           |   |                 | $      | 14,847       |                     |   | $      | 670          |   |   | $            | -          |   |   | $ | 15,517 |   |
|         Restricted cash             |   |                  | 1,521       |   |                 |   | -            |                     |   |   | -            |   |   |         | -          |   |   |   | 1,521 |   |
| Accounts receivable-net of allowance                                   |   |                  | 1           |   |                 |   | 32,034       |                     |   |   | 496          |   |   |         | -          |   |   |   | 32,531 |   |
| Prepaid expenses                                                       |   |                  | 3,290       |   |                 |   | 2,936        |                     |   |   | 188          |   |   |         | -          |   |   |   | 6,414 |   |
| Other current assets                                                   |   |                  | 24          |   |                 |   | 963          |                     |   |   | 36           |   |   |         | -          |   |   |   | 1,023 |   |
| Deferred income taxes                                                  |   |                  |  4,029 |   |                 |   | -            |                     |   |   | -            |   |   |         | -          |   |   |   | 4,029 |   |
| Current assets of discontinued operations, facility exits              |   |                  | -           |   |                 |   |  14,897 |                     |   |   | -            |   |   |         | -          |   |   |   | 14,897 |   |
| Total current assets                                                   |   |                  | 8,865       |   |                 |   | 65,677       |                     |   |   | 1,390        |   |   |         | -          |   |   |   | 75,932 |   |
| PROPERTY AND EQUIPMENT-Net                                             |   |                  | 8,224       |   |                 |   | 115,655      |                     |   |   | 2,346        |   |   |         | -          |   |   |   | 126,225 |   |
| GOODWILL                                                               |   |                  | -           |   |                 |   | 592,183      |                     |   |   | 11,798       |   |   |         | -          |   |   |   | 603,981 |   |
| INTANGIBLE ASSETS-Net                                                  |   |                  | -           |   |                 |   | 349,066      |                     |   |   | -            |   |   |         | -          |   |   |   | 349,066 |   |
| OTHER ASSETS                                                           |   |                  | 17,202      |   |                 |   | 1,205        |                     |   |   | 18           |   |   |         | -          |   |   |   | 18,425 |   |
| INVESTMENT IN SUBSIDIARIES                                             |   |                  | 1,077,622   |   |                 |   | -            |                     |   |   | -            |   |   |         | (1,077,622 | ) |   |   | - |   |
| TOTAL ASSETS                                                           |   | $                     | 1,111,913   |   |                 | $      | 1,123,786    |                     |   | $      | 15,552       |   |   | $            | (1,077,622 | ) |   | $ | 1,173,629 |   |
| LIABILITIES AND EQUITY                                                 |   |                  |        |   |                 |   |         |                     |   |   |         |   |   |         |       |   |   |   |   |   |
| CURRENT LIABILITIES:                                                   |   |                  |        |   |                 |   |         |                     |   |   |         |   |   |         |       |   |   |   |   |   |
| Accounts payable                                                       |   | $                     | 2,914       |   |                 | $      | 2,252        |                     |   | $      | 236          |   |   | $            | -          |   |   | $ | 5,402 |   |
| Accrued liabilities                                                    |   |                  | 16,110      |   |                 |   | 21,447       |                     |   |   | 1,041        |   |   |         | -          |   |   |   | 38,598 |   |
|         Income tax payable          |   |                  | 824         |   |                 |   | -            |                     |   |   | -            |   |   |         | -          |   |   |   | 824 |   |
| Current portion of long-term debt                                      |   |                  | 4,193       |   |                 |   | 1,952        |                     |   |   | -            |   |   |         | -          |   |   |   | 6,145 |   |
| Other current liabilities                                              |   |                  | 10,459      |   |                 |   | 18,784       |                     |   |   | 3,614        |   |   |         | -          |   |   |   | 32,857 |   |
| Current liabilities of discontinued operations, facility exits         |   |                  | -           |   |                 |   | 644          |                     |   |   | -            |   |   |         | -          |   |   |   | 644 |   |
| Total current liabilities                                              |   |                  | 34,500      |   |                 |   | 45,079       |                     |   |   | 4,891        |   |   |         | -          |   |   |   | 84,470 |   |
| LONG-TERM DEBT-Less current portion                                    |   |                  | 633,610     |   |                 |   | 2,500        |                     |   |   | -            |   |   |         | -          |   |   |   | 636,110 |   |
| OTHER LONG-TERM LIABILITIES                                            |   |                  | 116         |   |                 |   | 7,418        |                     |   |   | 32           |   |   |         | -          |   |   |   | 7,566 |   |
| OTHER LONG-TERM LIABILITIES OF DISCONTINUED OPERATIONS, FACILITY EXITS |   |                  | -           |   |                 |   | 1,796        |                     |   |   | -            |   |   |         | -          |   |   |   | 1,796 |   |
| DEFERRED INCOME TAXES                                                  |   |                  | 134,234     |   |                 |   | -            |                     |   |   | -            |   |   |         | -          |   |   |   | 134,234 |   |
| Total liabilities                                                      |   |                  | 802,460     |   |                 |   | 56,793       |                     |   |   | 4,923        |   |   |         | -          |   |   |   | 864,176 |   |
| EQUITY:                                                                |   |                  |        |   |                 |   |         |                     |   |   |         |   |   |         |       |   |   |   |   |   |
| CRC HEALTH CORPORATION STOCKHOLDER'S EQUITY                            |   |                  | 309,453     |   |                 |   | 1,066,993    |                     |   |   | 10,532       |   |   |         | (1,077,622 | ) |   |   | 309,356 |   |
| NONCONTROLLING INTEREST                                           |   |                  | -           |   |                 |   | -            |                     |   |   | 97           |   |   |         | -          |   |   |   | 97 |   |
| Total equity                                                           |   |                  | 309,453     |   |                 |   | 1,066,993    |                     |   |   | 10,629       |   |   |         | (1,077,622 | ) |   |   | 309,453 |   |
| TOTAL LIABILITIES AND EQUITY                                           |   | $                     | 1,111,913   |   |                 | $      | 1,123,786    |                     |   | $      | 15,552       |   |   | $            | (1,077,622 | ) |   | $ | 1,173,629 |   |

----

|                                                                   |   | CRC HealthCorporation |      |   | SubsidiaryGuarantors |   |      | SubsidiaryNon-Guarantors |   |   | Eliminations |   |   | Consolidated |       |
|------------------------------------------------------------------------|--------|-----------------------|-----------|--------|----------------------|--------|-----------|--------------------------|--------|--------|--------------|--------|--------|--------------|------------|
| ASSETS                                                                 |   |                  |      |   |                 |   |      |                     |   |   |         |   |   |         |       |
| CURRENT ASSETS:                                                        |   |                  |      |   |                 |   |      |                     |   |   |         |   |   |         |       |
| Cash and cash equivalents                                              |   | $                     | -         |   |                 | $      | 2,180     |                     |   | $      | 360          |   |   | $            | -          |   |   | $ | 2,540 |   |
| Accounts receivable-net of allowance for doubtful accounts             |   |                  | 2         |   |                 |   | 30,390    |                     |   |   | 434          |   |   |         | -          |   |   |   | 30,826 |   |
| Prepaid expenses                                                       |   |                  | 4,420     |   |                 |   | 3,204     |                     |   |   | 79           |   |   |         | -          |   |   |   | 7,703 |   |
| Other current assets                                                   |   |                  | 31        |   |                 |   | 1,543     |                     |   |   | 44           |   |   |         | -          |   |   |   | 1,618 |   |
| Deferred income taxes                                                  |   |                  | 4,029     |   |                 |   | -         |                     |   |   | -            |   |   |         | -          |   |   |   | 4,029 |   |
| Current assets of discontinued operations, facility exits              |   |                  | -         |   |                 |   | 14,125    |                     |   |   | -            |   |   |         | -          |   |   |   | 14,125 |   |
| Total current assets                                                   |   |                  | 8,482     |   |                 |   | 51,442    |                     |   |   | 917          |   |   |         | -          |   |   |   | 60,841 |   |
| PROPERTY AND EQUIPMENT-Net                                             |   |                  | 8,712     |   |                 |   | 118,358   |                     |   |   | 2,658        |   |   |         | -          |   |   |   | 129,728 |   |
| GOODWILL                                                               |   |                  | -         |   |                 |   | 592,280   |                     |   |   | 11,798       |   |   |         | -          |   |   |   | 604,078 |   |
| INTANGIBLE ASSETS-Net                                                  |   |                  | -         |   |                 |   | 354,463   |                     |   |   | -            |   |   |         | -          |   |   |   | 354,463 |   |
| OTHER ASSETS                                                           |   |                  | 18,778    |   |                 |   | 1,266     |                     |   |   | 21           |   |   |         | -          |   |   |   | 20,065 |   |
| INVESTMENT IN SUBSIDIARIES                                             |   |                  | 1,082,757 |   |                 |   | -         |                     |   |   | -            |   |   |         | (1,082,757 | ) |   |   | - |   |
| TOTAL ASSETS                                                           |   | $                     | 1,118,729 |   |                 | $      | 1,117,809 |                     |   | $      | 15,394       |   |   | $            | (1,082,757 | ) |   | $ | 1,169,175 |   |
| LIABILITIES AND EQUITY                                                 |   |                  |      |   |                 |   |      |                     |   |   |         |   |   |         |       |   |   |   |   |   |
| CURRENT LIABILITIES:                                                   |   |                  |      |   |                 |   |      |                     |   |   |         |   |   |         |       |   |   |   |   |   |
| Accounts payable                                                       |   | $                     | 3,636     |   |                 | $      | 2,424     |                     |   | $      | 105          |   |   | $            | -          |   |   | $ | 6,165 |   |
| Accrued liabilities                                                    |   |                  | 14,819    |   |                 |   | 13,514    |                     |   |   | 728          |   |   |         | -          |   |   |   | 29,061 |   |
| Income taxes payable                                                   |   |                  | 1,201     |   |                 |   |  -   |                     |   |   |  -      |   |   |         |  -    |   |   |   | 1,201 |   |
| Current portion of long-term debt                                      |   |                  | 4,193     |   |                 |   | 2,329     |                     |   |   | -            |   |   |         | -          |   |   |   | 6,522 |   |
| Other current liabilities                                              |   |                  | 14,603    |   |                 |   | 16,354    |                     |   |   | 700          |   |   |         | -          |   |   |   | 31,657 |   |
| Current liabilities of discontinued operations, facility exits         |   |                  | -         |   |                 |   | 703       |                     |   |   | -            |   |   |         | -          |   |   |   | 703 |   |
| Total current liabilities                                              |   |                  | 38,452    |   |                 |   | 35,324    |                     |   |   | 1,533        |   |   |         | -          |   |   |   | 75,309 |   |
| LONG-TERM DEBT-Less current portion                                    |   |                  | 642,575   |   |                 |   | 4,055     |                     |   |   | -            |   |   |         |  -    |   |   |   | 646,630 |   |
| OTHER LONG-TERM LIABILITIES                                            |   |                  | 149       |   |                 |   | 7,378     |                     |   |   | 26           |   |   |         |  -    |   |   |   | 7,553 |   |
| OTHER LONG-TERM LIABILITIES OF DISCONTINUED OPERATIONS, FACILITY EXITS |   |                  |  -   |   |                 |   | 1,909     |                     |   |   | -            |   |   |         | -          |   |   |   | 1,909 |   |
| DEFERRED INCOME TAXES                                                  |   |                  | 134,331   |   |                 |   | -         |                     |   |   | -            |   |   |         | -          |   |   |   | 134,331 |   |
| Total liabilities                                                      |   |                  | 815,507   |   |                 |   | 48,666    |                     |   |   | 1,559        |   |   |         | -          |   |   |   | 865,732 |   |
| EQUITY:                                                                |   |                  |      |   |                 |   |      |                     |   |   |         |   |   |         |       |   |   |   |   |   |
| CRC HEALTH CORPORATION STOCKHOLDER'S EQUITY                            |   |                  | 303,222   |   |                 |   | 1,069,143 |                     |   |   | 13,614       |   |   |         | (1,082,757 | ) |   |   | 303,222 |   |
| NONCONTROLLING INTEREST                                           |   |                  | -         |   |                 |   | -         |                     |   |   | 221          |   |   |         | -          |   |   |   | 221 |   |
| Total Equity                                                           |   |                  | 303,222   |   |                 |   | 1,069,143 |                     |   |   | 13,835       |   |   |         | (1,082,757 | ) |   |   | 303,443 |   |
| TOTAL LIABILITIES AND EQUITY                                           |   | $                     | 1,118,729 |   |                 | $      | 1,117,809 |                     |   | $      | 15,394       |   |   | $            | (1,082,757 | ) |   | $ | 1,169,175 |   |

----

|                                                                   |   | CRC HealthCorporation |    |   | SubsidiaryGuarantors |   |    | SubsidiaryNon-Guarantors |   |   | Eliminations |   |   | Consolidated |    |
|------------------------------------------------------------------------|--------|-----------------------|---------|--------|----------------------|--------|---------|--------------------------|--------|--------|--------------|--------|--------|--------------|---------|
| NET REVENUE:                                                           |   |                  |    |   |                 |   |    |                     |   |   |         |   |   |         |    |
| Net client service revenue                                             |   | $                     | 7       |   |                 | $      | 105,855 |                     |   | $      | 3,626        |   |   | $            | -       |   |   | $ | 109,488  |   |
| Other revenue                                                          |   |                  | 1       |   |                 |   | 1,878   |                     |   |   | -            |   |   |         | -       |   |   |   | 1,879  |   |
| Management fee revenue                                                 |   |                  | 20,404  |   |                 |   | -       |                     |   |   | -            |   |   |         | (20,404 | ) |   |   | - |   |
| Total net revenue                                                 |   |                  | 20,412  |   |                 |   | 107,733 |                     |   |   | 3,626        |   |   |         | (20,404 | ) |   |   | 111,367  |   |
| OPERATING EXPENSES:                                                    |   |                  |    |   |                 |   |    |                     |   |   |         |   |   |         |    |   |   |   |   |   |
| Salaries and benefits                                                  |   |                  | 5,854   |   |                 |   | 47,931  |                     |   |   | 1,934        |   |   |         | -       |   |   |   | 55,719  |   |
| Supplies, facilities and other operating costs                         |   |                  | 2,012   |   |                 |   | 27,541  |                     |   |   | 2,035        |   |   |         | -       |   |   |   | 31,588  |   |
| Provision for doubtful accounts                                        |   |                  | 1       |   |                 |   | 1,491   |                     |   |   | 59           |   |   |         | -       |   |   |   | 1,551  |   |
| Depreciation and amortization                                          |   |                  | 852     |   |                 |   | 4,633   |                     |   |   | 167          |   |   |         | -       |   |   |   | 5,652  |   |
| Management fee expense                                                 |   |                  | -       |   |                 |   | 19,784  |                     |   |   | 620          |   |   |         | (20,404 | ) |   |   | - |   |
| Total operating expenses                                               |   |                  | 8,719   |   |                 |   | 101,380 |                     |   |   | 4,815        |   |   |         | (20,404 | ) |   |   | 94,510  |   |
| OPERATING INCOME (LOSS)                                                |   |                  | 11,693  |   |                 |   | 6,353   |                     |   |   | (1,189       | )      |   |         | -       |   |   |   | 16,857  |   |
| INTEREST EXPENSE, NET                                                  |   |                  | (11,744 | )      |                 |   | (122    | )                        |   |   | -            |   |   |         | -       |   |   |   | (11,866  | ) |
| OTHER EXPENSE                                                          |   |                  | -       |   |                 |   | -       |                     |   |   | -            |   |   |         | -       |   |   |   | - |   |
| (LOSS) INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES           |   |                  | (51     | )      |                 |   | 6,231   |                     |   |   | (1,189       | )      |   |         | -       |   |   |   | 4,991  |   |
| INCOME TAX (BENEFIT) EXPENSE                                      |   |                  | (24     | )      |                 |   | 2,961   |                     |   |   | (565         | )      |   |         | -       |   |   |   | 2,372  |   |
| (LOSS) INCOME FROM CONTINUING OPERATIONS, NET OF TAX              |   |                  | (27     | )      |                 |   | 3,270   |                     |   |   | (624         | )      |   |         | -       |   |   |   | 2,619  |   |
| LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX BENEFIT OF ($119)        |   |                  | -       |   |                 |   | (288    | )                        |   |   | -            |   |   |         | -       |   |   |   | (288  | ) |
| NET (LOSS) INCOME                                                      |   |                  | (27     | )      |                 |   | 2,982   |                     |   |   | (624         | )      |   |         | -       |   |   |   | 2,331  |   |
| LESS: NET INCOME ATTRIBUTABLE TO THE NONCONTROLLING INTEREST |   |                  | -       |   |                 |   | -       |                     |   |   | 9            |   |   |         | -       |   |   |   | 9  |   |
| EQUITY IN INCOME OF SUBSIDIARIES, NET OF TAX                           |   |                  | 2,349   |   |                 |   | -       |                     |   |   | -            |   |   |         | (2,349  | ) |   |   | - |   |
| NET INCOME (LOSS) ATTRIBUTABLE TO CRC HEALTH CORPORATION               |   | $                     | 2,322   |   |                 | $      | 2,982   |                     |   | $      | (633         | )      |   | $            | (2,349  | ) |   | $ | 2,322  |   |

----

|                                                                     |   | CRC HealthCorporation |    |   | SubsidiaryGuarantors |   |    | SubsidiaryNon-Guarantors |   |   | Eliminations |   |   | Consolidated |         |
|--------------------------------------------------------------------------|--------|-----------------------|---------|--------|----------------------|--------|---------|--------------------------|--------|--------|--------------|--------|--------|--------------|--------------|
| NET REVENUE:                                                             |   |                  |    |   |                 |   |    |                     |   |   |         |   |   |         |         |
| Net client service revenue                                               |   | $                     | 3       |   |                 | $      | 112,792 |                     |   | $      | 5,272        |   |   | $            | -            |   |   | $ | 118,067 |   |
| Other revenue                                                            |   |                  | 3       |   |                 |   | 2,006   |                     |   |   | -            |   |   |         | -            |   |   |   | 2,009 |   |
| Management fee revenue                                                   |   |                  | 17,201  |   |                 |   | -       |                     |   |   | -            |   |   |         | (17,201      | ) |   |   | - |   |
| Total net revenue                                                   |   |                  | 17,207  |   |                 |   | 114,798 |                     |   |   | 5,272        |   |   |         | (17,201      | ) |   |   | 120,076 |   |
| OPERATING EXPENSES:                                                      |   |                  |    |   |                 |   |    |                     |   |   |         |   |   |         |         |   |   |   |   |   |
| Salaries and benefits                                                    |   |                  | 3,965   |   |                 |   | 52,862  |                     |   |   | 2,540        |   |   |         | -            |   |   |   | 59,367 |   |
| Supplies, facilities and other operating costs                           |   |                  | 1,974   |   |                 |   | 29,852  |                     |   |   | 3,055        |   |   |         | -            |   |   |   | 34,881 |   |
| Provision for doubtful accounts                                          |   |                  | -       |   |                 |   | 1,587   |                     |   |   | 20           |   |   |         | -            |   |   |   | 1,607 |   |
| Depreciation and amortization                                            |   |                  | 604     |   |                 |   | 4,890   |                     |   |   | 212          |   |   |         | -            |   |   |   | 5,706 |   |
| Management fee expense                                                   |   |                  | -       |   |                 |   | 16,375  |                     |   |   | 826          |   |   |         | (17,201      | ) |   |   | - |   |
| Total operating expenses                                                 |   |                  | 6,543   |   |                 |   | 105,566 |                     |   |   | 6,653        |   |   |         | (17,201      | ) |   |   | 101,561 |   |
| OPERATING INCOME (LOSS)                                                  |   |                  | 10,664  |   |                 |   | 9,232   |                     |   |   | (1,381       | )      |   |         | -            |   |   |   | 18,515 |   |
| INTEREST EXPENSE, NET                                                    |   |                  | (12,319 | )      |                 |   | (186    | )                        |   |   | -            |   |   |         | -            |   |   |   | (12,505 | ) |
| OTHER INCOME                                                             |   |                  | 1,585   |   |                 |   | -       |                     |   |   | -            |   |   |         | -            |   |   |   | 1,585 |   |
| (LOSS) INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES             |   |                  | (70     | )      |                 |   | 9,046   |                     |   |   | (1,381       | )      |   |         | -            |   |   |   | 7,595 |   |
| INCOME TAX (BENEFIT) EXPENSE                                             |   |                  | (30     | )      |                 |   | 3,820   |                     |   |   | (583         | )      |   |         | -            |   |   |   | 3,207 |   |
| (LOSS) INCOME FROM CONTINUING OPERATIONS, NET OF TAX                |   |                  | (40     | )      |                 |   | 5,226   |                     |   |   | (798         | )      |   |         | -            |   |   |   | 4,388 |   |
| LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX BENEFIT OF ($365)          |   |                  | -       |   |                 |   | (685    | )                        |   |   | -            |   |   |         | -            |   |   |   | (685 | ) |
| NET (LOSS) INCOME                                                        |   |                  | (40     | )      |                 |   | 4,541   |                     |   |   | (798         | )      |   |         | -            |   |   |   | 3,703 |   |
| LESS: NET INCOME (LOSS) ATTRIBUTABLE TO THE NONCONTROLLING INTEREST |   |                  | -       |   |                 |   | 9       |                     |   |   | (63          | )      |   |         | -            |   |   |   | (54 | ) |
| EQUITY IN INCOME OF SUBSIDIARIES, NET OF TAX                             |   |                  | 3,797   |   |                 |   | -       |                     |   |   | -            |   |   |         | (3,797       | ) |   |   | - |   |
| NET INCOME (LOSS)ATTRIBUTABLE TO CRC HEALTH CORPORATION             |   | $                     | 3,757   |   |                 | $      | 4,532   |                     |   | $      | (735         | )      |   | $            |  (3,797 | ) |   | $ | 3,757 |   |

----

|                                                            |   | CRC HealthCorporation |    |   | SubsidiaryGuarantors |   |        | SubsidiaryNon-Guarantors |   |   | Eliminations |   |   | Consolidated |    |
|-----------------------------------------------------------------|--------|-----------------------|---------|--------|----------------------|--------|-------------|--------------------------|--------|--------|--------------|--------|--------|--------------|---------|
| NET REVENUE:                                                    |   |                  |    |   |                 |   |        |                     |   |   |         |   |   |         |    |
| Net client service revenue                                      |   | $                     | 13      |   |                 | $      | 206,730     |                     |   | $      | 6,706        |   |   | $            | -       |   |   | $ | 213,449 |   |
| Other revenue                                                   |   |                  | 5       |   |                 |   | 3,762       |                     |   |   | -            |   |   |         | -       |   |   |   | 3,767 |   |
| Management fee revenue                                          |   |                  | 40,467  |   |                 |   | -           |                     |   |   | -            |   |   |         | (40,467 | ) |   |   | - |   |
| Total net revenue                                          |   |                  | 40,485  |   |                 |   | 210,492     |                     |   |   | 6,706        |   |   |         | (40,467 | ) |   |   | 217,216 |   |
| OPERATING EXPENSES:                                             |   |                  |    |   |                 |   |        |                     |   |   |         |   |   |         |    |   |   |   |   |   |
| Salaries and benefits                                           |   |                  | 11,030  |   |                 |   | 98,442      |                     |   |   | 3,690        |   |   |         | -       |   |   |   | 113,162 |   |
| Supplies, facilities and other operating costs                  |   |                  | 3,916   |   |                 |   | 55,223      |                     |   |   | 3,938        |   |   |         | -       |   |   |   | 63,077 |   |
| Provision for doubtful accounts                                 |   |                  | 1       |   |                 |   | 3,000       |                     |   |   | 83           |   |   |         | -       |   |   |   | 3,084 |   |
| Depreciation and amortization                                   |   |                  | 1,743   |   |                 |   | 9,334       |                     |   |   | 333          |   |   |         | -       |   |   |   | 11,410 |   |
| Management fee expense                                          |   |                  | -       |   |                 |   | 39,116      |                     |   |   | 1,351        |   |   |         | (40,467 | ) |   |   | - |   |
| Total operating expenses                                        |   |                  | 16,690  |   |                 |   | 205,115     |                     |   |   | 9,395        |   |   |         | (40,467 | ) |   |   | 190,733 |   |
| OPERATING INCOME (LOSS)                                         |   |                  | 23,795  |   |                 |   | 5,377       |                     |   |   | (2,689       | )      |   |         | -       |   |   |   | 26,483 |   |
| INTEREST EXPENSE, NET                                           |   |                  | (23,565 | )      |                 |   | (253        | )                        |   |   | -            |   |   |         | -       |   |   |   | (23,818 | ) |
| OTHER EXPENSE                                                   |   |                  | (82     | )      |                 |   | -           |                     |   |   | -            |   |   |         | -       |   |   |   | (82 | ) |
| INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES    |   |                  | 148     |   |                 |   |  5,124 |                     |   |   | (2,689       | )      |   |         | -       |   |   |   | 2,583 |   |
| INCOME TAX EXPENSE (BENEFIT)                                    |   |                  | 10      |   |                 |   | 353         |                     |   |   | (185         | )      |   |         | -       |   |   |   | 178 |   |
| INCOME (LOSS) FROM CONTINUING OPERATIONS, NET OF TAX            |   |                  | 138     |   |                 |   | 4,771       |                     |   |   | (2,504       | )      |   |         | -       |   |   |   | 2,405 |   |
| LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX BENEFIT OF ($768) |   |                  | -       |   |                 |   | (1,388      | )                        |   |   | -            |   |   |         | -       |   |   |   | (1,388 | ) |
| NET INCOME (LOSS)                                          |   |                  | 138     |   |                 |   | 3,383       |                     |   |   | (2,504       | )      |   |         | -       |   |   |   | 1,017 |   |
| LESS: NET LOSS ATTRIBUTABLE TO THE NONCONTROLLING INTEREST |   |                  | -       |   |                 |   | (4          | )                        |   |   | (115         | )      |   |         | -       |   |   |   | (119 | ) |
| EQUITY IN INCOME OF SUBSIDIARIES, NET OF TAX                    |   |                  | 998     |   |                 |   | -           |                     |   |   | -            |   |   |         | (998    | ) |   |   | - |   |
| NET INCOME (LOSS) ATTRIBUTABLE TO CRC HEALTH CORPORATION   |   | $                     | 1,136   |   |                 | $      | 3,387       |                     |   | $      | (2,389       | )      |   | $            | (998    | ) |   | $ | 1,136 |   |

----

|                                                                     |   | CRC HealthCorporation |    |   | SubsidiaryGuarantors |   |    | SubsidiaryNon-Guarantors |   |   | Eliminations |   |   | Consolidated |         |
|--------------------------------------------------------------------------|--------|-----------------------|---------|--------|----------------------|--------|---------|--------------------------|--------|--------|--------------|--------|--------|--------------|--------------|
| NET REVENUE:                                                             |   |                  |    |   |                 |   |    |                     |   |   |         |   |   |         |         |
| Net client service revenue                                               |   | $                     | 12      |   |                 | $      | 221,251 |                     |   | $      | 8,757        |   |   | $            | -            |   |   | $ | 230,020 |   |
| Other revenue                                                            |   |                  |  6 |   |                 |   | 3,973   |                     |   |   | -            |   |   |         | -            |   |   |   | 3,979 |   |
| Management fee revenue                                                   |   |                  | 38,681  |   |                 |   | -       |                     |   |   | -            |   |   |         | (38,681      | ) |   |   | - |   |
| Total net revenue                                                   |   |                  | 38,699  |   |                 |   | 225,224 |                     |   |   | 8,757        |   |   |         | (38,681      | ) |   |   | 233,999 |   |
| OPERATING EXPENSES:                                                      |   |                  |    |   |                 |   |    |                     |   |   |         |   |   |         |         |   |   |   |   |   |
| Salaries and benefits                                                    |   |                  | 8,176   |   |                 |   | 105,889 |                     |   |   | 4,658        |   |   |         | -            |   |   |   | 118,723 |   |
| Supplies, facilities and other operating costs                           |   |                  | 3,984   |   |                 |   | 58,892  |                     |   |   | 5,382        |   |   |         | -            |   |   |   | 68,258 |   |
| Provision for doubtful accounts                                          |   |                  | 8       |   |                 |   | 3,179   |                     |   |   | 71           |   |   |         | -            |   |   |   | 3,258 |   |
| Depreciation and amortization                                            |   |                  | 1,124   |   |                 |   | 9,623   |                     |   |   | 419          |   |   |         | -            |   |   |   | 11,166 |   |
| Management fee expense                                                   |   |                  | -       |   |                 |   | 37,195  |                     |   |   | 1,486        |   |   |         | (38,681      | ) |   |   | - |   |
| Total operating expenses                                                 |   |                  | 13,292  |   |                 |   | 214,778 |                     |   |   | 12,016       |   |   |         | (38,681      | ) |   |   | 201,405 |   |
| OPERATING INCOME (LOSS)                                                  |   |                  | 25,407  |   |                 |   | 10,446  |                     |   |   | (3,259       | )      |   |         | -            |   |   |   | 32,594 |   |
| INTEREST EXPENSE, NET                                                    |   |                  | (26,648 | )      |                 |   | (374    | )                        |   |   | -            |   |   |         | -            |   |   |   | (27,022 | ) |
| OTHER EXPENSE                                                            |   |                  | (33     | )      |                 |   | -       |                     |   |   | -            |   |   |         | -            |   |   |   | (33 | ) |
| (LOSS) INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES             |   |                  | (1,274  | )      |                 |   | 10,072  |                     |   |   | (3,259       | )      |   |         | -            |   |   |   | 5,539 |   |
| INCOME TAX (BENEFIT) EXPENSE                                             |   |                  | (521    | )      |                 |   | 4,121   |                     |   |   | (1,334       | )      |   |         | -            |   |   |   | 2,266 |   |
| (LOSS) INCOME FROM CONTINUING OPERATIONS, NET OF TAX                |   |                  | (753    | )      |                 |   | 5,951   |                     |   |   | (1,925       | )      |   |         | -            |   |   |   | 3,273 |   |
| LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX BENEFIT OF ($743)          |   |                  | -       |   |                 |   | (1,397  | )                        |   |   | -            |   |   |         | -            |   |   |   | (1,397 | ) |
| NET (LOSS) INCOME                                                        |   |                  | (753    | )      |                 |   | 4,554   |                     |   |   | (1,925       | )      |   |         | -            |   |   |   | 1,876 |   |
| LESS: NET INCOME (LOSS) ATTRIBUTABLE TO THE NONCONTROLLING INTEREST |   |                  | -       |   |                 |   | 10      |                     |   |   | (367         | )      |   |         | -            |   |   |   | (357 | ) |
| EQUITY IN INCOME OF SUBSIDIARIES, NET OF TAX                             |   |                  | 2,986   |   |                 |   | -       |                     |   |   | -            |   |   |         | (2,986       | ) |   |   | - |   |
| NET INCOME (LOSS) ATTRIBUTABLE TO CRC HEALTH CORPORATION            |   | $                     | 2,233   |   |                 | $      | 4,544   |                     |   | $      | (1,558       | )      |   | $            |  (2,986 | ) |   | $ | 2,233 |   |

----

|                                                                                     |   | CRC HealthCorporation |   |   | SubsidiaryGuarantors |   |    | SubsidiaryNon-Guarantors |   |   | Eliminations |   |   | Consolidated |   |
|------------------------------------------------------------------------------------------|--------|-----------------------|--------|--------|----------------------|--------|---------|--------------------------|--------|--------|--------------|--------|--------|--------------|--------|
| CASH FLOWS FROM OPERATING ACTIVITIES:                                                    |   |                  |   |   |                 |   |    |                     |   |   |         |   |   |         |   |
| Net cash provided by operating activities                                                |   | $                     | 1,650  |   |                 | $      | 25,796  |                     |   | $      | 1,030        |   |   | $            | -      |   |   | $ | 28,476 |   |
| CASH FLOWS FROM INVESTING ACTIVITIES:                                                    |   |                  |   |   |                 |   |    |                     |   |   |         |   |   |         |   |   |   |   |   |   |
| Additions of property and equipment                                                      |   |                  | (1,240 | )      |                 |   | (3,275  | )                        |   |   | (140         | )      |   |         | -      |   |   |   | (4,655 | ) |
| Proceeds from sale of property and equipment                                             |   |                  | 110    |   |                 |   | 16      |                     |   |   | -            |   |   |         | -      |   |   |   | 126 |   |
|         Proceeds from sale of discontinued operations |   |                  | -      |   |                 |   | 475     |                     |   |   | -            |   |   |         | -      |   |   |   | 475 |   |
| Acquisition adjustments                                                                  |   |                  | (59    | )      |                 |   | -       |                     |   |   | -            |   |   |         | -      |   |   |   | (59 | ) |
| Net cash used in investing activities                                                    |   |                  | (1,189 | )      |                 |   | (2,784  | )                        |   |   | (140         | )      |   |         | -      |   |   |   | (4,113 | ) |
| CASH FLOWS FROM FINANCING ACTIVITIES:                                                    |   |                  |   |   |                 |   |    |                     |   |   |         |   |   |         |   |   |   |   |   |   |
| Intercompany transfers                                                                   |   |                  | 10,918 |   |                 |   | (10,338 | )                        |   |   | (580         | )      |   |         | -      |   |   |   | - |   |
| Capital distributed to Parent                                                       |   |                  | (156   | )      |                 |   | -       |                     |   |   | -            |   |   |         | -      |   |   |   | (156 | ) |
| Capitalized financing costs                                                              |   |                  | (92    | )      |                 |   | -       |                     |   |   | -            |   |   |         | -      |   |   |   | (92 | ) |
| Noncontrolling interest buyout                                                      |   |                  | (89    | )      |                 |   | -       |                     |   |   | -            |   |   |         | -      |   |   |   | (89 | ) |
| Repayments of capital lease obligations                                                  |   |                  | -      |   |                 |   | (7      | )                        |   |   | -            |   |   |         | -      |   |   |   | (7 | ) |
|         Repayments under revolving line of credit     |   |                  | (7,000 | )      |                 |   | -       |                     |   |   | -            |   |   |         | -      |   |   |   | (7,000 | ) |
| Repayments of long-term debt                                                             |   |                  | (4,042 | )      |                 |   | -       |                     |   |   | -            |   |   |         | -      |   |   |   | (4,042 | ) |
| Net cash used in financing activities                                                    |   |                  | (461   | )      |                 |   | (10,345 | )                        |   |   | (580         | )      |   |         | -      |   |   |   | (11,386 | ) |
| INCREASE IN CASH AND CASH EQUIVALENTS                                                    |   |                  | -      |   |                 |   | 12,667  |                     |   |   | 310          |   |   |         | -      |   |   |   | 12,977 |   |
| CASH AND CASH EQUIVALENTS Beginning of period                                            |   |                  | -      |   |                 |   | 2,180   |                     |   |   | 360          |   |   |         | -      |   |   |   | 2,540 |   |
| CASH AND CASH EQUIVALENTS End of period                                                  |   | $                     | -      |   |                 | $      | 14,847  |                     |   | $      | 670          |   |   | $            | -      |   |   | $ | 15,517 |   |

----

|                                                     |   | CRC HealthCorporation |   |   | SubsidiaryGuarantors |   |    | SubsidiaryNon-Guarantors |   |   | Eliminations |   |   | Consolidated |   |
|----------------------------------------------------------|--------|-----------------------|--------|--------|----------------------|--------|---------|--------------------------|--------|--------|--------------|--------|--------|--------------|--------|
| CASH FLOWS FROM OPERATING ACTIVITIES:                    |   |                  |   |   |                 |   |    |                     |   |   |         |   |   |         |   |
| Net cash provided by operating activities                |   | $                     | 2,777  |   |                 | $      | 14,354  |                     |   | $      | 3,700        |   |   | $            | -      |   |   | $ | 20,831 |   |
| CASH FLOWS FROM INVESTING ACTIVITIES:                    |   |                  |   |   |                 |   |    |                     |   |   |         |   |   |         |   |   |   |   |   |   |
| Additions of property and equipment-net                  |   |                  | (2,987 | )      |                 |   | (9,213  | )                        |   |   | (323         | )      |   |         | -      |   |   |   | (12,523 | ) |
| Proceeds from sale of property and equipment             |   |                  | -      |   |                 |   | 55      |                     |   |   | -            |   |   |         | -      |   |   |   | 55 |   |
| Prior period acquisition adjustments                     |   |                  | -      |   |                 |   | (33     | )                        |   |   | -            |   |   |         | -      |   |   |   | (33 | ) |
| Payments made under earnout arrangements                 |   |                  | (2,531 | )      |                 |   | -       |                     |   |   | -            |   |   |         | -      |   |   |   | (2,531 | ) |
| Net cash used in investing activities                    |   |                  | (5,518 | )      |                 |   | (9,191  | )                        |   |   | (323         | )      |   |         | -      |   |   |   | (15,032 | ) |
| CASH FLOWS FROM FINANCING ACTIVITIES:                    |   |                  |   |   |                 |   |    |                     |   |   |         |   |   |         |   |   |   |   |   |   |
| Intercompany transfers                                   |   |                  | 3,278  |   |                 |   | (566    | )                        |   |   | (2,712       | )      |   |         | -      |   |   |   | - |   |
| Capital distributed to Parent                  |   |                  | (305   | )      |                 |   | -       |                     |   |   | -            |   |   |         | -      |   |   |   | (305 | ) |
| Capitalized financing costs                              |   |                  | (136   | )      |                 |   |  - |                     |   |   | -            |   |   |         | -      |   |   |   | (136 | ) |
| Repayments of capital lease obligations                  |   |                  | -      |   |                 |   | (11     | )                        |   |   | -            |   |   |         | -      |   |   |   | (11 | ) |
| Net borrowings under revolver line of credit             |   |                  | 4,000  |   |                 |   | -       |                     |   |   | -            |   |   |         | -      |   |   |   | 4,000 |   |
| Repayments of long-term debt                             |   |                  | (4,096 | )      |                 |   | -       |                     |   |   | -            |   |   |         | -      |   |   |   | (4,096 | ) |
| Net cash provided by (used in) financing activities |   |                  | 2,741  |   |                 |   | (577    | )                        |   |   | (2,712       | )      |   |         | -      |   |   |   | (548 | ) |
| INCREASE IN CASH AND CASH EQUIVALENTS               |   |                  | -      |   |                 |   | 4,586   |                     |   |   | 665          |   |   |         | -      |   |   |   | 5,251 |   |
| CASH AND CASH EQUIVALENTS-Beginning of period            |   |                  | -      |   |                 |   | 4,929   |                     |   |   | 189          |   |   |         | -      |   |   |   | 5,118 |   |
| CASH AND CASH EQUIVALENTS-End of period                  |   | $                     | -      |   |                 | $      | 9,515   |                     |   | $      | 854          |   |   | $            | -      |   |   | $ | 10,369 |   |

----

| 14. | RESTRUCTURING |
|-----|---------------|

|                                           |   | Workforce Reduction |   |          | Consolidation and Exit of Excess Facilities |   |   | Total  |   |
|------------------------------------------------|--------|---------------------|--------|---------------|---------------------------------------------|--------|--------|--------|--------|
|                                           |   | (in thousands)      |   |
| Restructuring reserve as of December 31, 2008  |   | $                   | 176    |          |                                        | $      | 3,104  |   |   | $ | 3,280 |   |
|   Expenses                           |   |                | 704    |          |                                        |   | 1,303  |   |   |   | 2,007 |   |
|   Cash (payments) receipts, net      |   |                | (530   | )   |                                        |   | (661   | )      |   |   | (1,191 | ) |
| Restructuring reserve as of June 30, 2009 |   | $                   | 350    |          |                                        | $      | 3,746  |   |   | $ | 4,096 |   |

| 15. | DISCONTINUED OPERATIONS |
|-----|-------------------------|

|                              |   | Three Months Ended June 30, 2009 |   |   | Three Months Ended June 30, 2008 |   |   | Six Months Ended June 30, 2009 |   |   | Six Months Ended June 30, 2008 |   |
|-----------------------------------|--------|---------------------------------------|--------|--------|---------------------------------------|--------|--------|-------------------------------------|--------|--------|-------------------------------------|--------|
| Net revenue                       |   | $                                     | 492    |   |                                  | $      | 2,217  |                                |   | $      | 1,590                               |   |   | $ | 4,348 |   |
| Operating expenses                |   |                                  | 870    |   |                                  |   | 3,267  |                                |   |   | 2,302                               |   |   |   | 6,488 |   |
| Asset impairment                  |   |                                  | -      |   |                                  |   | -      |                                |   |   | 1,417                               |   |   |   | - |   |
| Loss on disposals            |   |                                  | 29     |   |                                  |   | -      |                                |   |   | 27                                  |   |   |   | - |   |
| Loss before income taxes          |   |                                  | (407   | )      |                                  |   | (1,050 | )                                   |   |   | (2,156                              | )      |   |   | (2,140 | ) |
| Tax benefit                       |   |                                  | (119   | )      |                                  |   | (365   | )                                   |   |   | (768                                | )      |   |   | (743 | ) |
| Loss from discontinued operations |   | $                                     | (288   | )      |                                  | $      | (685   | )                                   |   | $      | (1,388                              | )      |   | $ | (1,397 | ) |

----

| 16. | SEGMENT INFORMATION |
|-----|---------------------|

----

|                                                                          |   | Three Months Ended June 30, 2009 |    |   | Three Months Ended June 30, 2008 |   |    | Six Months Ended June 30, 2009 |   |          | Six Months Ended June 30, 2008 |   |
|-------------------------------------------------------------------------------|--------|---------------------------------------|---------|--------|---------------------------------------|--------|---------|-------------------------------------|--------|---------------|-------------------------------------|--------|
| Net revenue:                                                                  |   |                                  |    |   |                                  |   |    |                                |   |          |                                |   |
| Recovery division                                                             |   | $                                     | 78,386  |   |                                  | $      | 77,626  |                                |   | $             | 153,449                             |   |   | $ | 153,692 |   |
| Healthy living division                                                  |   |                                  | 32,919  |   |                                  |   | 42,364  |                                |   |          | 63,641                              |   |   |   | 80,123 |   |
| Corporate                                                                     |   |                                  | 62      |   |                                  |   | 86      |                                |   |          | 126                                 |   |   |   | 184 |   |
| Total consolidated net revenue                                                |   | $                                     | 111,367 |   |                                  | $      | 120,076 |                                |   | $             | 217,216                             |   |   | $ | 233,999 |   |
| Operating expenses:                                                           |   |                                  |    |   |                                  |   |    |                                |   |          |                                |   |   |   |   |   |
| Recovery division                                                             |   | $                                     | 52,791  |   |                                  | $      | 54,897  |                                |   | $             | 107,187                             |   |   | $ | 109,873 |   |
| Healthy living division                                                  |   |                                  | 32,987  |   |                                  |   | 40,109  |                                |   |          |  66,787                        |   |   |   | 78,205 |   |
| Corporate                                                                     |   |                                  | 8,732   |   |                                  |   | 6,555   |                                |   |          | 16,759                              |   |   |   | 13,327 |   |
| Total consolidated operating expenses                                         |   | $                                     | 94,510  |   |                                  | $      | 101,561 |                                |   | $             | 190,733                             |   |   | $ | 201,405 |   |
| Operating income (loss):                                                      |   |                                  |    |   |                                  |   |    |                                |   |          |                                |   |   |   |   |   |
| Recovery division                                                             |   | $                                     | 25,595  |   |                                  | $      | 22,729  |                                |   | $             | 46,262                              |   |   | $ | 43,819 |   |
| Healthy living division                                                  |   |                                  | (68     | )      |                                  |   | 2,255   |                                |   |          | (3,146                              | )      |   |   | 1,918 |   |
| Corporate                                                                     |   |                                  | (8,670  | )      |                                  |   | (6,469  | )                                   |   |          | (16,633                             | )      |   |   | (13,143 | ) |
| Total consolidated operating income                                           |   | $                                     | 16,857  |   |                                  | $      | 18,515  |                                |   | $             | 26,483                              |   |   | $ | 32,594 |   |
| Operating income:                                                             |   |                                  |    |   |                                  |   |    |                                |   |          |                                |   |   |   |   |   |
| Total consolidated operating income                                           |   | $                                     | 16,857  |   |                                  | $      | 18,515  |                                |   | $             | 26,483                              |   |   | $ | 32,594 |   |
| Interest expense, net                                                         |   |                                  | (11,866 | )      |                                  |   | (12,505 | )                                   |   |          | (23,818                             | )      |   |   | (27,022 | ) |
| Other expense                                                                 |   |                                  | -       |   |                                  |   | 1,585   |                                |   |          | (82                                 | )      |   |   | (33 | ) |
| Total consolidated income from continuing operations before income taxes |   | $                                     | 4,991   |   |                                  | $      | 7,595   |                                |   | $             | 2,583                               |   |   | $ | 5,539 |   |
| Capital expenditures:                                                         |   |                                  |    |   |                                  |   |    |                                |   |          |                                |   |   |   |   |   |
| Recovery division                                                             |   | $                                     | 1,085   |   |                                  | $      | 3,274   |                                |   | $             | 2,341                               |   |   | $ | 5,715 |   |
| Healthy living division                                                  |   |                                  | 728     |   |                                  |   | 1,861   |                                |   |          | 1,074                               |   |   |   | 3,824 |   |
| Corporate                                                                     |   |                                  | 528     |   |                                  |   | 1,605   |                                |   |          | 1,240                               |   |   |   | 2,987 |   |
| Total consolidated capital expenditures                                       |   | $                                     | 2,341   |   |                                  | $      | 6,740   |                                |   | $             | 4,655                               |   |   | $ | 12,523 |   |
|                                                                          |   |                                  |    |   |                                  |   |    |                                |   |          |                                |   |   |   |
|                                                                          |   |                                  |    |   |                                  |   |    |                                |   |          |
|                                                                          |   |                                  |    |   |                                  |   |    |                                |   | June 30, 2009 |                                |   | Dec. 31, 2008 |   |
| Total assets:                                                                 |   |                                  |    |   |                                  |   |    |                                |   |          |                                |   |   |   |   |   |
| Recovery division                                                             |   |                                  |    |   |                                  |   |    |                                |   | $             | 896,487                             |   |   | $ | 899,360 |   |
| Healthy living division                                             |   |                                  |    |   |                                  |   |    |                                |   |          | 225,656                             |   |   |   | 222,525 |   |
| Corporate                                                                     |   |                                  |    |   |                                  |   |    |                                |   |          | 51,486                              |   |   |   | 47,290 |   |
| Total consolidated assets                                                     |   |                                  |    |   |                                  |   |    |                                |   | $             | 1,173,629                           |   |   | $ | 1,169,175 |   |
|                                                                          |   |                                  |    |   |                                  |   |    |                                |   |          |                                |   |   |   |   |   |

----

| Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations. |
|--------------|----------------------------------------------------------------------------------------|

The following discussion should be read in conjunction with the Unaudited Condensed Consolidated Financial Statements and the related notes that appear elsewhere in this Quarterly Report.

----

----

|                                                                                                                                                                                                                            |   | Three Months Ended June 30, |    |   | Six Months Ended June 30, |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------|---------|--------|--------------------------------|--------|
| Statement of Income Data:                                                                                                                                                                                                       |   | 2009                             |    |   | %                              |   |   | 2008 |   |   | % |   |   | 2009 |   |   | % |   |   | 2008 |   |   | % |   |
| Net revenue:                                                                                                                                                                                                                    |   |                             |    |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Recovery division                                                                                                                                                                                                               |   | $                                | 78,386  |   |                           |   | 70.3 | % |   | $ | 77,626 |   |   |   | 64.6 | % |   | $ | 153,449 |   |   |   | 70.6 | % |   | $ | 153,692 |   |   |   | 65.7 | % |
| Healthy living division                                                                                                                                                                                                    |   |                             | 32,919  |   |                           |   | 29.6 | % |   |   | 42,364 |   |   |   | 35.3 | % |   |   | 63,641 |   |   |   | 29.3 | % |   |   | 80,123 |   |   |   | 34.2 | % |
| Corporate                                                                                                                                                                                                                       |   |                             | 62      |   |                           |   | 0.1 | % |   |   | 86 |   |   |   | 0.1 | % |   |   | 126 |   |   |   | 0.1 | % |   |   | 184 |   |   |   | 0.1 | % |
| Total net revenue                                                                                                                                                                                                               |   |                             | 111,367 |   |                           |   | 100.0 | % |   |   | 120,076 |   |   |   | 100.0 | % |   |   | 217,216 |   |   |   | 100.0 | % |   |   | 233,999 |   |   |   | 100.0 | % |
| Operating expenses:                                                                                                                                                                                                             |   |                             |    |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Recovery division                                                                                                                                                                                                               |   |                             | 52,791  |   |                           |   | 47.5 | % |   |   | 54,897 |   |   |   | 45.7 | % |   |   | 107,187 |   |   |   | 49.4 | % |   |   | 109,873 |   |   |   | 47.0 | % |
| Healthy living division                                                                                                                                                                                                    |   |                             | 32,987  |   |                           |   | 29.6 | % |   |   | 40,109 |   |   |   | 33.4 | % |   |   | 66,787 |   |   |   | 30.7 | % |   |   | 78,205 |   |   |   | 33.4 | % |
| Corporate                                                                                                                                                                                                                       |   |                             | 8,732   |   |                           |   | 7.8 | % |   |   | 6,555 |   |   |   | 5.5 | % |   |   | 16,759 |   |   |   | 7.7 | % |   |   | 13,327 |   |   |   | 5.7 | % |
| Total operating expenses                                                                                                                                                                                                        |   |                             | 94,510  |   |                           |   | 84.9 | % |   |   | 101,561 |   |   |   | 84.6 | % |   |   | 190,733 |   |   |   | 87.8 | % |   |   | 201,405 |   |   |   | 86.1 | % |
| Operating income (loss):                                                                                                                                                                                                        |   |                             |    |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Recovery division                                                                                                                                                                                                               |   |                             | 25,595  |   |                           |   | 23.0 | % |   |   | 22,729 |   |   |   | 18.9 | % |   |   | 46,262 |   |   |   | 21.3 | % |   |   | 43,819 |   |   |   | 18.7 | % |
| Healthy living division                                                                                                                                                                                                    |   |                             | (68     | )      |                           |   | (0.1 | )% |   |   | 2,255 |   |   |   | 1.9 | % |   |   | (3,146 | ) |   |   | (1.4 | )% |   |   | 1,918 |   |   |   | 0.8 | % |
| Corporate                                                                                                                                                                                                                       |   |                             | (8,670  | )      |                           |   | (7.8 | )% |   |   | (6,469 | ) |   |   | (5.4 | )% |   |   | (16,633 | ) |   |   | (7.7 | )% |   |   |  (13,143 | ) |   |   | (5.6 | )% |
| Total operating income                                                                                                                                                                                                          |   |                             | 16,857  |   |                           |   | 15.1 | % |   |   | 18,515 |   |   |   | 15.4 | % |   |   | 26,483 |   |   |   | 12.2 | % |   |   | 32,594 |   |   |   | 13.9 | % |
| Interest expense, net                                                                                                                                                                                                           |   |                             | (11,866 | )      |                           |   |   |   |   |   | (12,505 | ) |   |   |   |   |   |   | (23,818 | ) |   |   |   |   |   |   | (27,022 | ) |   |   |   |   |
| Other income (expense)                                                                                                                                                                                                          |   |                             | -       |   |                           |   |   |   |   |   | 1,585 |   |   |   |   |   |   |   | (82 | ) |   |   |   |   |   |   | (33 | ) |   |   |   |   |
| Income from continuing operations before income taxes                                                                                                                                                                      |   |                             | 4,991   |   |                           |   |   |   |   |   | 7,595 |   |   |   |   |   |   |   | 2,583 |   |   |   |   |   |   |   |  5,539 |   |   |   |   |   |
| Income tax expense                                                                                                                                                                                                              |   |                             | 2,372   |   |                           |   |   |   |   |   | 3,207 |   |   |   |   |   |   |   | 178 |   |   |   |   |   |   |   | 2,266 |   |   |   |   |   |
| Income from continuing operations, net of tax                                                                                                                                                                              |   |                             | 2,619   |   |                           |   |   |   |   |   | 4,388 |   |   |   |   |   |   |   | 2,405 |   |   |   |   |   |   |   | 3,273 |   |   |   |   |   |
| Loss from discontinued operations, (net of tax benefit of ($119) and ($365) in the three months ended June 30, 2009 and 2008, respectively, and ($768) and ($743) in the six months ended June 30, 2009 and 2008, respectively) |   |                             | (288    | )      |                           |   |   |   |   |   | (685 | ) |   |   |   |   |   |   | (1,388 | ) |   |   |   |   |   |   | (1,397 | ) |   |   |   |   |
| Net income                                                                                                                                                                                                                      |   |                             | 2,331   |   |                           |   |   |   |   |   | 3,703 |   |   |   |   |   |   |   | 1,017 |   |   |   |   |   |   |   | 1,876 |   |   |   |   |   |
| Less: Net income (loss) attributable to the noncontrolling interest                                                                                                                                                   |   |                             | 9       |   |                           |   |   |   |   |   | (54 | ) |   |   |   |   |   |   | (119 | ) |   |   |   |   |   |   | (357 | ) |   |   |   |   |
| Net income attributable to CRC Health Corporation                                                                                                                                                                          |   | $                                | 2,322   |   |                           |   |   |   |   | $ | 3,757 |   |   |   |   |   |   | $ | 1,136 |   |   |   |   |   |   | $ | 2,233 |   |   |   |   |   |

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|                                           |   | Six Months EndedJune 30, |    |
|------------------------------------------------|--------|------------------------------------|---------|
|                                           |   | 2009                               |    |   | 2008 |   |
|                                           |   | (In thousands)                     |    |
| Net cash provided by operating activities |   | $                                  | 28,476  |   |   | $ | 20,831 |   |
| Net cash used in investing activities          |   |                               | (4,113  | ) |   |   | (15,032 | ) |
| Net cash used in financing activities     |   |                               | (11,386 | ) |   |   | (548 | ) |
| Net increase in cash                           |   | $                                  | 12,977  |   |   | $ | 5,251 |   |

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| Item 3. | Quantitative and Qualitative Disclosure about Market Risk |
|--------------|-----------------------------------------------------------|

For quantitative and qualitative disclosures about market risk affecting us, see "Quantitative and Qualitative Disclosure about Market Risk" in Item 7A of Part II of our Annual Report on Form 10-K for the year ended December 31, 2008. As of June 30, 2009, our exposure to market risk has not changed materially sinceDecember 31, 2008.

| Item 4. |               Controls and Procedures |
|--------------|--------------------------------------------------------------------------------------------------------|

Evaluation of Disclosure Controls and Procedures

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| Item 1A. | Risk Factors |
|---------------|--------------|

As of June 30, 2009, there 

Item 6. 

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SIGNATURE

|   |   |                   |
|--------|--------|------------------------|
|   |   | CRC HEALTH CORPORATION |
|   |   | (Registrant)           |
|   |   |                   |   |
|   |   | By                     | /s/    KEVIN HOGGE         |
|   |   |                   | Kevin Hogge, |
|   |   |                   | Chief Financial Officer |
|   |   |                   | (Principal Financial Officer and PrincipalAccounting Officer and duly authorized signatory) |

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EXHIBIT INDEX

|   |                                                                                                                |
|--------|---------------------------------------------------------------------------------------------------------------------|
| 31.1   | Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer ‡                                       |
|   |                                                                                                                |
| 31.2   | Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer and Principal Accounting Officer ‡ |
|   |                                                                                                                |
| 32.1   | Section 1350 Certification of Principal Executive Officer †                                              |
|   |                                                                                                                |
| 32.2   | Section 1350 Certification of Principal Financial Officer and Principal Accounting Officer †             |

| ‡ | Filed herewith. |
|---------|-----------------|

| † | Furnished herewith. |
|---------|---------------------|

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