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Acadia Healthcare (ACHC) Up 14.2% Since Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Acadia Healthcare Company, Inc. (ACHC - Free Report) . Shares have added about 14.2% in that time frame.

Will the recent positive trend continue leading up to its next earnings release, or is ACHC due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Acadia Healthcare Beats on Q4 Earnings, Revenues

Acadia Healthcare Company Inc. reported fourth-quarter 2017 adjusted earnings of 61 cents per share, which beat the Zacks Consensus Estimate by 10.8%. Moreover, earnings improved 3.4% year over year.

The quarterly results include a non-cash decrease in the provision for income taxes of $20.2 million from the impact of the Tax Cuts and Jobs Act of 2017 on net deferred tax liabilities.

Quarter Details

Acadia Healthcare’s revenues for the fourth quarter rose 3.1% to $724.5 million from the prior-year quarter and surpassed the Zacks Consensus Estimate by 1.4%.

Same facility revenues improved 5.6%, with 2.4% increase in patient days and 3.1% rise in revenues per patient day.

Total same facility revenues grew 5.6% with 2.4% increase in patient days and 3.1% rise in revenues per patient day. The growth can be attributed to the addition of more than 750 new beds to existing facilities in 2017. The company expects to add more than 800 beds to existing and new facilities in 2018.

U.S. same facility revenues were up 6.6% from the year-ago quarter. The company also recorded a 3.1% increase in patient days year over year.

U.K. same facility revenues rose 3.7% year over year to $236.4 million. The number of patient days inched up 1.5% from the year-ago quarter.

Acadia Healthcare’s consolidated adjusted EBITDA was $153.5 million, up 2.7% year over year.

Total expenses inched up nearly 0.5% year over year to $663.9 million due to higher salaries, professional fees, wages and benefits, supplies as well as rents and leases.

Financial Update

Cash and cash equivalents as of Dec 31, 2017 were $67.3 million, up 17.9% from 2016-end level.

Long-term debt was $3.21 billion as of Dec 31, 2017, down 1.5% from the 2016-end level.

Net cash provided by operating activities for 2017 was Sep 30, 2017 was $399.6 million, up 10.5% year over year.

2018 & 1Q18 Guidance

For 2018, the company expects adjusted earnings per share between $2.42 and $2.48 on revenues of $3.04-$3.08 billion. Adjusted EBITDA is expected between $637 million and $644 million.

The company projects an exchange rate of $1.35 per British Pound Sterling and a tax rate of about 21%.

For first quarter of 2018, the company expects adjusted earnings per share between 47 cents and 49 cents.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. There has been one revision higher for the current quarter compared to four lower.

VGM Scores

At this time, ACHC has a nice Growth Score of B, though it is lagging a bit on the momentum front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Based on our scores, the stock is primarily suitable for value investors while also being suitable for those looking for growth and to a lesser degree momentum.

Outlook

Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Notably, ACHC has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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