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Here's Why Investors Should Hold Acadia (ACHC) Stock for Now
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Acadia Healthcare Company, Inc. (ACHC - Free Report) is aided by growing patient volumes, an extensive healthcare network resulting from numerous joint ventures (JVs) and other expansion initiatives, as well as improved cash reserves.
Zacks Rank & Price Performance
Acadia Healthcare currently carries a Zacks Rank #3 (Hold).
The stock has gained 5.5% in the past three months.
Image Source: Zacks Investment Research
Robust Growth Prospects
The Zacks Consensus Estimate for Acadia Healthcare’s 2024 earnings is pegged at $3.51 per share, indicating an improvement of 2% from the prior-year reading, while the estimate for revenues is $3.2 billion, implying a 9.4% increase from the prior-year actual.
The consensus mark for 2025 earnings is pegged at $3.92 per share, indicating 11.5% growth from the 2024 estimate. The consensus estimate for revenues is $3.5 billion, which indicates a rise of 10.3% from the 2024 estimate.
Impressive Earnings Surprise History
ACHC’s bottom line surpassed estimates in each of the trailing four quarters, the average surprise being 4.52%.
Business Tailwinds
Acadia Healthcare’s U.S. operations are bolstered by strong patient volumes and improved operational efficiencies, thereby driving its revenue growth. The ongoing prevalence of mental health issues in the United States is expected to sustain the demand for behavioral healthcare services, which should continue to benefit the company's revenues. Management projects 2024 revenues to be between $3.18 billion and $3.225 billion, the midpoint of which represents a 9.3% increase from 2023.
Acadia Healthcare is executing a solid growth strategy that includes acquisitions of healthcare facilities, capacity expansions at existing facilities and JVs with leading U.S. health systems. It expects to add more than 400 beds to existing facilities in 2024. It also plans to open a maximum of 14 comprehensive treatment centers this year.
JVs allow Acadia Healthcare to open new facilities and extend its reach across the country. The company currently has 21 JVs in place.
As of Jun 30, 2024, Acadia Healthcare operated 258 behavioral healthcare facilities across 38 states and Puerto Rico. The company maintains a strong financial position, with sufficient cash reserves to cover short-term debt obligations and undertake business investments. It also had $371.5 million available under its $600 million revolving credit facility as of Jun 30, 2024.
Risks
Despite the upside potential, there are a few factors that investors should keep an eye on.
Acadia Healthcare continues to witness an escalating expense level as a result of higher salaries, wages and benefits, professional fees and other operating costs. Higher expenses can put a pressure on the company’s margins in the days ahead.
The company's debt-laden balance sheet creates financial risk. As of Jun 30, 2024, it held a total debt of $1.8 billion. Elevated debt levels induce an increase in interest expenses, which escalated 37.8% year over year in the first half of 2024. ACHC's return on equity of 11.4% is significantly lower than the industry average. This reflects the company's relative inefficiency in utilizing shareholders’ funds to generate profits.
HCA Healthcare’s earnings surpassed estimates in three of the last four quarters and missed the mark once, the average surprise being 8.24%. The Zacks Consensus Estimate for HCA’s 2024 earnings indicates a rise of 15.2% while the same for revenues indicates an improvement of 8.9% from the respective year-ago actual. The consensus mark for HCA’s earnings has moved 4.4% north in the past 30 days.
The bottom line of Boston Scientific beat estimates in each of the trailing four quarters, the average surprise being 7.18%. The Zacks Consensus Estimate for BSX’s 2024 earnings indicates a rise of 17.1% while the same for revenues indicates an improvement of 14.2% from the respective year-ago actual. The consensus mark for BSX’s earnings has moved 3.4% north in the past 30 days.
Ensign Group’s earnings outpaced estimates in each of the trailing four quarters and missed the mark once, the average surprise being 1.40%. The Zacks Consensus Estimate for ENSG’s 2024 earnings indicates a rise of 13.8% while the estimate for revenues indicates an improvement of 13.1% from the respective year-ago actual. The consensus mark for ENSG’s earnings has moved 0.6% north in the past 30 days.
Shares of HCA Healthcare, Boston Scientific and Ensign Group have gained 39.3%, 47.3% and 44.5%, respectively, in a year.
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Here's Why Investors Should Hold Acadia (ACHC) Stock for Now
Acadia Healthcare Company, Inc. (ACHC - Free Report) is aided by growing patient volumes, an extensive healthcare network resulting from numerous joint ventures (JVs) and other expansion initiatives, as well as improved cash reserves.
Zacks Rank & Price Performance
Acadia Healthcare currently carries a Zacks Rank #3 (Hold).
The stock has gained 5.5% in the past three months.
Image Source: Zacks Investment Research
Robust Growth Prospects
The Zacks Consensus Estimate for Acadia Healthcare’s 2024 earnings is pegged at $3.51 per share, indicating an improvement of 2% from the prior-year reading, while the estimate for revenues is $3.2 billion, implying a 9.4% increase from the prior-year actual.
The consensus mark for 2025 earnings is pegged at $3.92 per share, indicating 11.5% growth from the 2024 estimate. The consensus estimate for revenues is $3.5 billion, which indicates a rise of 10.3% from the 2024 estimate.
Impressive Earnings Surprise History
ACHC’s bottom line surpassed estimates in each of the trailing four quarters, the average surprise being 4.52%.
Business Tailwinds
Acadia Healthcare’s U.S. operations are bolstered by strong patient volumes and improved operational efficiencies, thereby driving its revenue growth. The ongoing prevalence of mental health issues in the United States is expected to sustain the demand for behavioral healthcare services, which should continue to benefit the company's revenues. Management projects 2024 revenues to be between $3.18 billion and $3.225 billion, the midpoint of which represents a 9.3% increase from 2023.
Acadia Healthcare is executing a solid growth strategy that includes acquisitions of healthcare facilities, capacity expansions at existing facilities and JVs with leading U.S. health systems. It expects to add more than 400 beds to existing facilities in 2024. It also plans to open a maximum of 14 comprehensive treatment centers this year.
JVs allow Acadia Healthcare to open new facilities and extend its reach across the country. The company currently has 21 JVs in place.
As of Jun 30, 2024, Acadia Healthcare operated 258 behavioral healthcare facilities across 38 states and Puerto Rico. The company maintains a strong financial position, with sufficient cash reserves to cover short-term debt obligations and undertake business investments. It also had $371.5 million available under its $600 million revolving credit facility as of Jun 30, 2024.
Risks
Despite the upside potential, there are a few factors that investors should keep an eye on.
Acadia Healthcare continues to witness an escalating expense level as a result of higher salaries, wages and benefits, professional fees and other operating costs. Higher expenses can put a pressure on the company’s margins in the days ahead.
The company's debt-laden balance sheet creates financial risk. As of Jun 30, 2024, it held a total debt of $1.8 billion. Elevated debt levels induce an increase in interest expenses, which escalated 37.8% year over year in the first half of 2024. ACHC's return on equity of 11.4% is significantly lower than the industry average. This reflects the company's relative inefficiency in utilizing shareholders’ funds to generate profits.
Stocks to Consider
Some better-ranked stocks in the Medical space include HCA Healthcare, Inc. (HCA - Free Report) , Boston Scientific Corporation (BSX - Free Report) and The Ensign Group, Inc. (ENSG - Free Report) . While HCA Healthcare currently sports a Zacks Rank #1 (Strong Buy), Boston Scientific and Ensign Group carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
HCA Healthcare’s earnings surpassed estimates in three of the last four quarters and missed the mark once, the average surprise being 8.24%. The Zacks Consensus Estimate for HCA’s 2024 earnings indicates a rise of 15.2% while the same for revenues indicates an improvement of 8.9% from the respective year-ago actual. The consensus mark for HCA’s earnings has moved 4.4% north in the past 30 days.
The bottom line of Boston Scientific beat estimates in each of the trailing four quarters, the average surprise being 7.18%. The Zacks Consensus Estimate for BSX’s 2024 earnings indicates a rise of 17.1% while the same for revenues indicates an improvement of 14.2% from the respective year-ago actual. The consensus mark for BSX’s earnings has moved 3.4% north in the past 30 days.
Ensign Group’s earnings outpaced estimates in each of the trailing four quarters and missed the mark once, the average surprise being 1.40%. The Zacks Consensus Estimate for ENSG’s 2024 earnings indicates a rise of 13.8% while the estimate for revenues indicates an improvement of 13.1% from the respective year-ago actual. The consensus mark for ENSG’s earnings has moved 0.6% north in the past 30 days.
Shares of HCA Healthcare, Boston Scientific and Ensign Group have gained 39.3%, 47.3% and 44.5%, respectively, in a year.