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Acadia Healthcare (ACHC) Forms JV to Build Behavioral Health Units

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Acadia Healthcare Company, Inc. (ACHC - Free Report) has formed a joint venture (JV) with Geisinger Health, one of Pennsylvania’s premier, integrated healthcare systems.

The JV is formed to construct two new facilities, each with 96-beds serving the Central and Northeastern regions of Pennsylvania.

Notably, the first facility is expected to open in 2022 and the second in 2023. The two new inpatient behavioral health facilities intend to offer comprehensive inpatient services to adults, seniors and adolescents who are grappling with intense mental health disorders. Such disorders may include anxiety, depression, bipolar disorder and posttraumatic stress disorder (PTSD).

The latest move highlights Acadia Healthcare’s commitment to provide access to the much-needed behavioral health services throughout Pennsylvania. With its presence across 45 counties in Pennsylvania and serving more than 1 million people, Geisinger Health seems apt as a partner to complement the company’s endeavors.

Acadia Healthcare is a pure-play provider of behavioral healthcare services and is well placed in a market for mental health illness, which is set to expand further. According to a 2019 survey by the Substance Abuse and Mental Health Services Administration of the U.S. Department of Health and Human Services (SAMHSA), 20.6% adults in the United States, aged 18 years or above, suffered mental illness in 2019 and a 5.2% endured a serious mental illness.

We believe, the market for behavioral services is driven by COVID-induced mental sickness. With heightened rates of isolation and loneliness, financial, housing and food insecurities, the pandemic took a huge toll on the mental health of the Americans.

Also, management believes that the market for behavioral services will continue to grow amid increased awareness of mental health and substance abuse conditions, and treatment options.

In order to expand its market reach, Acadia Healthcare is resorting to several strategies, such as a national marketing strategy to attract patients and referral sources, increasing the volume of out-of-state referrals, providing a broader range of services to new and existing patients and clients and selectively pursuing opportunities to expand its facility and bed count through acquisitions, de novo facilities, joint ventures and bed additions in the existing hubs.

During the year ended Dec 31, 2020, Acadia Healthcare added 460 beds in the United States consisting of 240 to the existing facilities and another 220 through the floating of two joint venture facilities. Besides, it opened six comprehensive treatment centers (CTCs).

Earlier during the week, the company formed a joint venture with Lutheran Health Network of Indiana to erect a new behavioral health hospital for meting out enhanced behavioral health services across Fort Wayne and the neighboring counties.

We expect more activity in the company’s U.S. business since it recently sold its UK business and will now solely focus on growing its U.S. operations.

The stock has soared 95.1% in the past six months compared with the industry’s growth of 54%.


Other stocks in the same space like Community Health Systems Inc. (CYH - Free Report) and HCA Healthcare Inc. (HCA - Free Report) have also gained 199.8% and 51.4%, respectively, while Avita Medical Ltd. (RCEL - Free Report) has lost 23.3% over the same frame.

Acadia Healthcare currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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