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Why Is Acadia Healthcare (ACHC) Up 9.1% Since Last Earnings Report?
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It has been about a month since the last earnings report for Acadia Healthcare (ACHC - Free Report) . Shares have added about 9.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Acadia Healthcare due for a pullback? 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 catalysts.
Acadia Healthcare's Q2 Earnings Beat on Patient Volumes
Acadia Healthcare reported adjusted second-quarter earnings of 91 cents per share, which beat the Zacks Consensus Estimate by 3.4%. However, the bottom line dipped 1.1% year over year.
Total revenues advanced 8.8% year over year to $796 million. The top line outpaced the consensus mark by 1.5%.
The results benefited on the back of growing patient volumes, which remain the most significant contributor to a healthcare facility operator’s top line. Higher patient days, sustained demand for behavioral health services and impressive growth-related initiatives remained other tailwinds for the company. Management anticipates further volume growth in the second half of 2024 as the recently added facilities and beds continue to scale up. However, the upside was partly offset by an elevated expense level.
Q2 Operations
Same-facility revenues of $776.1 million rose 8.3% year over year but fell short of our estimate of $776.4 million. The year-over-year improvement was driven by 5.6% growth in revenue per patient day and a 2.6% increase in patient days.
Admissions inched up 0.7% year over year. The average length of stay grew 1.8% year over year but missed our growth estimate of 2%.
In the overall facility, patient days advanced 2.6% year over year while admissions inched up 1% year over year. Revenue per patient day improved 6.1% year over year, which was higher than our growth estimate of 6%. The average length of stay rose 1.6% year over year but lagged our growth estimate of 2.9%.
Adjusted EBITDA climbed 7.6% year over year to $187.6 million but came lower than our estimate of $190.1 million. Adjusted EBITDA margin remained flat year over year at 29.5%.
Total expenses of $689.6 million escalated 8.6% year over year, higher than our estimate of $674.9 million. The year-over-year increase was due to higher salaries, wages and benefits, professional fees, other operating costs and interest expenses.
Financial Update (as of Jun 30, 2024)
Acadia Healthcare exited the second quarter with cash and cash equivalents of $77.2 million, which decreased 22.9% from the 2023-end level. It had a leftover capacity of $371.5 million under its $600 million revolving credit facility at the second-quarter end.
Total assets of $5.7 billion increased 6% from the figure at 2023 end.
Long-term debt amounted to $1.8 billion, which escalated 32.2% from the figure as of Dec 31, 2023. The current portion of long-term debt was $66.6 million.
Total equity of $3 billion advanced 6.1% from the 2023-end level. The net leverage ratio was around 2.5X at the second-quarter end.
Net cash used in operations totaled $150.1 million in the first half of 2024 against net cash generated from operating activities of $208.2 million in the prior-year comparable period.
Business Update
Acadia Healthcare added 37 beds to its existing facilities in the second quarter. It also inaugurated one acute care hospital, named Agave Ridge Behavioral Hospital, in Arizona.
2024 Guidance Updated
Revenues are projected to lie between $3.18 billion and $3.225 billion compared with the earlier guided range of $3.18-$3.25 billion. The mid-point of the updated outlook indicates an improvement of 9.3% from the 2023 figure.
Adjusted EBITDA is estimated to be in the range of $735-$765 million compared with the previous guidance of $730-$770 million. The mid-point of the revised outlook indicates 10.7% growth from the 2023 figure.
Adjusted earnings per share (EPS) are predicted to be between $3.45 and $3.65 compared with the earlier guided range of $3.40-$3.70.
Interest expenses continue to be estimated within the band of $110-$120 million. Depreciation and amortization expenses continue to be anticipated in the $150-$160 million band. The tax rate is still expected within 24.5-25.5%. Stock compensation expenses are still expected to lie between $40 million and $45 million.
Operating cash flows are still forecasted within the range of $525-$575 million. Expansion capital expenditure is still anticipated between $425 million and $475 million. Maintenance and IT capital expenditures continue to be expected in the range of $90-$110 million.
Management still estimates to add more than 400 beds to existing facilities in 2024. It aims to inaugurate a maximum of 14 comprehensive treatment centers. ACHC anticipates opening four inpatient facilities in the second half of 2024, which comprise two new joint venture facilities.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
At this time, Acadia Healthcare has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, 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 D. 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. Notably, Acadia Healthcare has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Acadia Healthcare belongs to the Zacks Medical - Hospital industry. Another stock from the same industry, Tenet Healthcare (THC - Free Report) , has gained 11.3% over the past month. More than a month has passed since the company reported results for the quarter ended June 2024.
Tenet reported revenues of $5.1 billion in the last reported quarter, representing a year-over-year change of +0.4%. EPS of $2.31 for the same period compares with $1.44 a year ago.
Tenet is expected to post earnings of $2.33 per share for the current quarter, representing a year-over-year change of +61.8%. Over the last 30 days, the Zacks Consensus Estimate has changed +1.7%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #1 (Strong Buy) for Tenet. Also, the stock has a VGM Score of A.
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Why Is Acadia Healthcare (ACHC) Up 9.1% Since Last Earnings Report?
It has been about a month since the last earnings report for Acadia Healthcare (ACHC - Free Report) . Shares have added about 9.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Acadia Healthcare due for a pullback? 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 catalysts.
Acadia Healthcare's Q2 Earnings Beat on Patient Volumes
Acadia Healthcare reported adjusted second-quarter earnings of 91 cents per share, which beat the Zacks Consensus Estimate by 3.4%. However, the bottom line dipped 1.1% year over year.
Total revenues advanced 8.8% year over year to $796 million. The top line outpaced the consensus mark by 1.5%.
The results benefited on the back of growing patient volumes, which remain the most significant contributor to a healthcare facility operator’s top line. Higher patient days, sustained demand for behavioral health services and impressive growth-related initiatives remained other tailwinds for the company. Management anticipates further volume growth in the second half of 2024 as the recently added facilities and beds continue to scale up. However, the upside was partly offset by an elevated expense level.
Q2 Operations
Same-facility revenues of $776.1 million rose 8.3% year over year but fell short of our estimate of $776.4 million. The year-over-year improvement was driven by 5.6% growth in revenue per patient day and a 2.6% increase in patient days.
Admissions inched up 0.7% year over year. The average length of stay grew 1.8% year over year but missed our growth estimate of 2%.
In the overall facility, patient days advanced 2.6% year over year while admissions inched up 1% year over year. Revenue per patient day improved 6.1% year over year, which was higher than our growth estimate of 6%. The average length of stay rose 1.6% year over year but lagged our growth estimate of 2.9%.
Adjusted EBITDA climbed 7.6% year over year to $187.6 million but came lower than our estimate of $190.1 million. Adjusted EBITDA margin remained flat year over year at 29.5%.
Total expenses of $689.6 million escalated 8.6% year over year, higher than our estimate of $674.9 million. The year-over-year increase was due to higher salaries, wages and benefits, professional fees, other operating costs and interest expenses.
Financial Update (as of Jun 30, 2024)
Acadia Healthcare exited the second quarter with cash and cash equivalents of $77.2 million, which decreased 22.9% from the 2023-end level. It had a leftover capacity of $371.5 million under its $600 million revolving credit facility at the second-quarter end.
Total assets of $5.7 billion increased 6% from the figure at 2023 end.
Long-term debt amounted to $1.8 billion, which escalated 32.2% from the figure as of Dec 31, 2023. The current portion of long-term debt was $66.6 million.
Total equity of $3 billion advanced 6.1% from the 2023-end level. The net leverage ratio was around 2.5X at the second-quarter end.
Net cash used in operations totaled $150.1 million in the first half of 2024 against net cash generated from operating activities of $208.2 million in the prior-year comparable period.
Business Update
Acadia Healthcare added 37 beds to its existing facilities in the second quarter. It also inaugurated one acute care hospital, named Agave Ridge Behavioral Hospital, in Arizona.
2024 Guidance Updated
Revenues are projected to lie between $3.18 billion and $3.225 billion compared with the earlier guided range of $3.18-$3.25 billion. The mid-point of the updated outlook indicates an improvement of 9.3% from the 2023 figure.
Adjusted EBITDA is estimated to be in the range of $735-$765 million compared with the previous guidance of $730-$770 million. The mid-point of the revised outlook indicates 10.7% growth from the 2023 figure.
Adjusted earnings per share (EPS) are predicted to be between $3.45 and $3.65 compared with the earlier guided range of $3.40-$3.70.
Interest expenses continue to be estimated within the band of $110-$120 million. Depreciation and amortization expenses continue to be anticipated in the $150-$160 million band. The tax rate is still expected within 24.5-25.5%. Stock compensation expenses are still expected to lie between $40 million and $45 million.
Operating cash flows are still forecasted within the range of $525-$575 million. Expansion capital expenditure is still anticipated between $425 million and $475 million. Maintenance and IT capital expenditures continue to be expected in the range of $90-$110 million.
Management still estimates to add more than 400 beds to existing facilities in 2024. It aims to inaugurate a maximum of 14 comprehensive treatment centers. ACHC anticipates opening four inpatient facilities in the second half of 2024, which comprise two new joint venture facilities.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
At this time, Acadia Healthcare has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, 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 D. 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. Notably, Acadia Healthcare has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Acadia Healthcare belongs to the Zacks Medical - Hospital industry. Another stock from the same industry, Tenet Healthcare (THC - Free Report) , has gained 11.3% over the past month. More than a month has passed since the company reported results for the quarter ended June 2024.
Tenet reported revenues of $5.1 billion in the last reported quarter, representing a year-over-year change of +0.4%. EPS of $2.31 for the same period compares with $1.44 a year ago.
Tenet is expected to post earnings of $2.33 per share for the current quarter, representing a year-over-year change of +61.8%. Over the last 30 days, the Zacks Consensus Estimate has changed +1.7%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #1 (Strong Buy) for Tenet. Also, the stock has a VGM Score of A.