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Why Is Acadia Healthcare (ACHC) Down 6.1% Since Last Earnings Report?
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A month has gone by since the last earnings report for Acadia Healthcare (ACHC - Free Report) . Shares have lost about 6.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Acadia Healthcare due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Acadia Healthcare Q4 Earnings Beat on Strong Admissions
Acadia Healthcare reported fourth-quarter 2023 adjusted earnings of 85 cents per share, which beat the Zacks Consensus Estimate by 6.3%. The bottom line improved 21.4% year over year.
Total revenues amounted to $742.8 million, which advanced 10% year over year. The top line outpaced the consensus mark by 1.9%.
The quarterly results benefited on the back of improved patient volumes and expansion initiatives. Solid demand for behavioral health and substance use treatment led to the increased utilization of Acadia Healthcare’s healthcare services. However, the upside was partly offset by an elevated expense level.
Q4 Operations
Same-facility revenues rose 10.3% year over year to $736.2 million in the quarter under review, which came higher than the Zacks Consensus Estimate of $711 million and our estimate of $710.7 million. The increase came on the back of 7.1% rise in revenue per patient day and a 2.9% improvement in patient days. Admissions inched up 1.5% year over year but fell short of our growth estimate of 3.3%. The average length of stay grew 1.4% year over year in the fourth quarter, higher than our growth estimate of 0.6%.
In the overall facility, patient days and admissions increased 2.8% and 2%, respectively, on a year-over-year basis. Revenue per patient day improved 7% year over year, higher than our growth estimate of 5.6%. Average length of stay inched up 0.8% year over year.
Adjusted EBITDA, excluding income from the Provider Relief Fund (“PRF”), advanced 16.4% year over year to $169.6 million, higher than our estimate of $165.1 million. Adjusted EBITDA margin, excluding income from the PRF, of 27.5% improved 150 basis points year over year.
Total expenses escalated 12.9% year over year to $662.8 million due to increase in salaries, wages and benefits, professional fees, other operating expense, and transaction, legal and other costs. The metric also came higher than our estimate of $625.2 million.
Financial Update (As of Dec 31, 2023)
Acadia Healthcare exited the fourth quarter with cash and cash equivalents of $100.1 million, which rose 2.5% from the 2022-end level. It had a leftover capacity of $516.5 million under its $600 million revolving credit facility at the fourth-quarter end.
Total assets of $5.4 billion increased 7.4% from the figure at 2022 end.
Long-term debt amounted to $1.3 billion, which decreased 1.6% from the figure as of Dec 31, 2022. The current portion of long-term debt amounted to $29.2 million.
Total equity of $2.8 billion dipped 1.1% from the 2022-end level. The net leverage ratio was around 1.9X at the fourth-quarter end.
Acadia Healthcare generated net cash from operations of $462.3 million in 2023, which climbed 21.5% from the 2022 figure.
Business Update
Acadia Healthcare added 98 beds to its existing facilities in the quarter under review. It also inaugurated two comprehensive treatment centers (CTCs). The company added 13 outpatient programs. The renovated adult hospital and outpatient facility comprising 101 beds and a part of the Illinois-based Montrose Behavioral Health Hospital was inaugurated by Acadia Healthcare in the fourth quarter.
Additionally, it completed the Turning Point Centers buyout on Feb 22, 2024. The acquired company is a specialty provider of substance use disorder and primary mental health treatment services that caters to the Salt Lake City of UT.
1Q24 Outlook
Revenues are forecast to be $775-$785 million. Adjusted EBITDA is anticipated between $170 million and $175 million. Adjusted earnings per share (EPS) are estimated between 78 cents and 83 cents.
2024 Guidance
Revenues are projected between $3.18 billion and $3.25 billion, the mid-point of which indicates an improvement of 9.7% from the 2023 reported figure of $2.9 billion.
Adjusted EBITDA is expected to be $730-$770 million, the mid-point of which suggests 10.7% growth from the 2023 reported figure of $677.7 million.
Adjusted EPS is forecast between $3.40 and $3.70 in 2024, the mid-point of which implies a rise of 3.2% from the 2023 figure of $3.44.
Interest expenses are estimated within $110-$120 million. Depreciation and amortization expenses are anticipated in the $150-$160 million band. The tax rate is expected within 24.5-25.5%. Stock compensation expenses are projected to lie between $40 million and $45 million.
Operating cash flows are forecast to be $525-$575 million for 2024. Expansion capital expenditure is anticipated between $425 million and $475 million. Maintenance and IT capital expenditure is expected to be $90-$110 million.
Acadia Healthcare anticipates to add more than 400 beds to existing facilities in 2024. It targets to inaugurate a maximum of 14 CTCs this year. It also aims to open three joint venture facilities in Texas, Colorado and Michigan in 2024.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
Currently, Acadia Healthcare has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Acadia Healthcare has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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Why Is Acadia Healthcare (ACHC) Down 6.1% Since Last Earnings Report?
A month has gone by since the last earnings report for Acadia Healthcare (ACHC - Free Report) . Shares have lost about 6.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Acadia Healthcare due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Acadia Healthcare Q4 Earnings Beat on Strong Admissions
Acadia Healthcare reported fourth-quarter 2023 adjusted earnings of 85 cents per share, which beat the Zacks Consensus Estimate by 6.3%. The bottom line improved 21.4% year over year.
Total revenues amounted to $742.8 million, which advanced 10% year over year. The top line outpaced the consensus mark by 1.9%.
The quarterly results benefited on the back of improved patient volumes and expansion initiatives. Solid demand for behavioral health and substance use treatment led to the increased utilization of Acadia Healthcare’s healthcare services. However, the upside was partly offset by an elevated expense level.
Q4 Operations
Same-facility revenues rose 10.3% year over year to $736.2 million in the quarter under review, which came higher than the Zacks Consensus Estimate of $711 million and our estimate of $710.7 million. The increase came on the back of 7.1% rise in revenue per patient day and a 2.9% improvement in patient days. Admissions inched up 1.5% year over year but fell short of our growth estimate of 3.3%. The average length of stay grew 1.4% year over year in the fourth quarter, higher than our growth estimate of 0.6%.
In the overall facility, patient days and admissions increased 2.8% and 2%, respectively, on a year-over-year basis. Revenue per patient day improved 7% year over year, higher than our growth estimate of 5.6%. Average length of stay inched up 0.8% year over year.
Adjusted EBITDA, excluding income from the Provider Relief Fund (“PRF”), advanced 16.4% year over year to $169.6 million, higher than our estimate of $165.1 million. Adjusted EBITDA margin, excluding income from the PRF, of 27.5% improved 150 basis points year over year.
Total expenses escalated 12.9% year over year to $662.8 million due to increase in salaries, wages and benefits, professional fees, other operating expense, and transaction, legal and other costs. The metric also came higher than our estimate of $625.2 million.
Financial Update (As of Dec 31, 2023)
Acadia Healthcare exited the fourth quarter with cash and cash equivalents of $100.1 million, which rose 2.5% from the 2022-end level. It had a leftover capacity of $516.5 million under its $600 million revolving credit facility at the fourth-quarter end.
Total assets of $5.4 billion increased 7.4% from the figure at 2022 end.
Long-term debt amounted to $1.3 billion, which decreased 1.6% from the figure as of Dec 31, 2022. The current portion of long-term debt amounted to $29.2 million.
Total equity of $2.8 billion dipped 1.1% from the 2022-end level. The net leverage ratio was around 1.9X at the fourth-quarter end.
Acadia Healthcare generated net cash from operations of $462.3 million in 2023, which climbed 21.5% from the 2022 figure.
Business Update
Acadia Healthcare added 98 beds to its existing facilities in the quarter under review. It also inaugurated two comprehensive treatment centers (CTCs). The company added 13 outpatient programs. The renovated adult hospital and outpatient facility comprising 101 beds and a part of the Illinois-based Montrose Behavioral Health Hospital was inaugurated by Acadia Healthcare in the fourth quarter.
Additionally, it completed the Turning Point Centers buyout on Feb 22, 2024. The acquired company is a specialty provider of substance use disorder and primary mental health treatment services that caters to the Salt Lake City of UT.
1Q24 Outlook
Revenues are forecast to be $775-$785 million. Adjusted EBITDA is anticipated between $170 million and $175 million. Adjusted earnings per share (EPS) are estimated between 78 cents and 83 cents.
2024 Guidance
Revenues are projected between $3.18 billion and $3.25 billion, the mid-point of which indicates an improvement of 9.7% from the 2023 reported figure of $2.9 billion.
Adjusted EBITDA is expected to be $730-$770 million, the mid-point of which suggests 10.7% growth from the 2023 reported figure of $677.7 million.
Adjusted EPS is forecast between $3.40 and $3.70 in 2024, the mid-point of which implies a rise of 3.2% from the 2023 figure of $3.44.
Interest expenses are estimated within $110-$120 million. Depreciation and amortization expenses are anticipated in the $150-$160 million band. The tax rate is expected within 24.5-25.5%. Stock compensation expenses are projected to lie between $40 million and $45 million.
Operating cash flows are forecast to be $525-$575 million for 2024. Expansion capital expenditure is anticipated between $425 million and $475 million. Maintenance and IT capital expenditure is expected to be $90-$110 million.
Acadia Healthcare anticipates to add more than 400 beds to existing facilities in 2024. It targets to inaugurate a maximum of 14 CTCs this year. It also aims to open three joint venture facilities in Texas, Colorado and Michigan in 2024.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
Currently, Acadia Healthcare has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Acadia Healthcare has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.