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Why Acadia Healthcare (ACHC) Dips 1.6% Despite Q1 Earnings Beat

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Shares of Acadia Healthcare Company, Inc. (ACHC - Free Report) have declined 1.6% so far despite delivering strong first-quarter 2022 results on May 3, 2022. Higher patient days and average length of stay on growing demand for its behavioral healthcare services drove ACHC’s results. Yet, increased operating expenses and lower U.S. same facility admissions remain a concern for investors. The ongoing staffing challenges in the industry might shoot up costs in the coming days, putting pressure on ACHC’s bottom line.

Acadia Healthcare expects operating cash flows for 2022 within $350-$400 million after including $39 million of CARES Act repayments. This projection is unimpressive. Last year, its net operating cash flows came in at $374.5 million, down 43.2% year over year.

Let’s delve deeper into the March-quarter results.

Acadia Healthcare reported first-quarter 2022 adjusted earnings of 67 cents per share, beating the Zacks Consensus Estimate of 63 cents. The bottom line also increased from 47 cents per share a year ago.

Revenues at Acadia Healthcare improved to $616.7 million for the quarter under review from $551.2 million a year ago. The top line also beat the consensus mark of $606 million.

Q1 Operations

Total U.S. same facility revenues rose 8.6% year over year to $592.3 million on account of a 2.2% improvement in patient days and 6.2% growth in revenue per patient day. Average length of stay increased 4.9% year over year in the first quarter. Yet, admissions dipped 2.6% year over year.

In the overall U.S. facility, revenues increased 11.9% year over year. While patient days rose 4.7% year over year, revenue per patient day increased 6.8% and admissions inched up 2.3%.

Adjusted EBITDA increased to $135.5 million from $119.5 million a year ago. The metric was above management’s guided range of $130-$135 million. Adjusted EBITDA margin also expanded 30 basis points year over year to 22%.

Total expenses increased to $537.3 million from $521.9 million in the prior-year quarter, primarily due to a rise in salaries, wages and benefits, professional fees, supplies, and other operating expenses.

In the first quarter, Acadia Healthcare added 28 beds to its existing operations.

Financial Update (as of Mar 31, 2022)

Cash and cash equivalents of $140.4 million were up from the $133.8 million level recorded on Dec 31, 2021.

Total assets of $4,834.6 million increased from the $4,768.1 million level at 2021 end.

Long-term debt totaled $1,463.8 million, down from $1,478.6 million as of Dec 31, 2021. The current portion of the long-term debt was $21.3 million. At the first-quarter-end, the long-term debt to capitalization was 36.2%.

Acadia Healthcare’s net operating cash flows for the first quarter came in at $76.8 million, up from $76 million a year ago.

2022 Outlook

ACHC reiterated estimation for revenues within $2.55-$2.60 billion for 2022, indicating an increase from the 2021 level of $2.3 billion. Acadia Healthcare aims to add around 300 beds to its existing facilities.

Adjusted EBITDA is projected to be $575-$610 million, implying an increase from $558.7 million in 2021. Adjusted earnings per share are forecast within $2.85-$3.15, calling for a rise from the 2021 level of $2.56.

Operating cash flows (inclusive of $39 million of CARES Act repayments) are expected to be $350-$400 million. While capital expenditures for expansion initiatives are expected within $290-$340 million, the same for maintenance will likely be around $50 million. Further, interest expense is anticipated within $65-$70 million.

Other Stocks That Posted a Beat

While the currently Zacks Rank #3 (Hold) Acadia Healthcare delivered a bottom-line beat in the March quarter, here are some other stocks from the  Medical - Hospital space that also surpassed on earnings. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Community Health Systems, Inc. (CYH - Free Report) reported first-quarter 2022 adjusted net income of 14 cents share, which outpaced the Zacks Consensus Estimate by 7.7% owing to higher adjusted admissions.

CYH’s interest expense, net, decreased 6.1% year over year to $217 million in the first quarter. On a same-store basis, Community Health’s adjusted admissions improved 3.2% from the prior-year quarter’s reported figure.

Mednax, Inc. (MD - Free Report) reported first-quarter 2022 adjusted earnings of 33 cents per share, which beat the Zacks Consensus Estimate by 22.2%, courtesy of consistent growth in patient volumes and an improved net acquisition activity.

MD’s interest expense of $11.8 million plunged 33% year over year on the back of continued redemption of its senior notes. MD continues to anticipate revenues worth $2 billion for 2022, indicating a 4.7% increase from the 2021 reported figure.

Tenet Healthcare Corporation (THC - Free Report) reported first-quarter 2022 adjusted net earnings of $1.93 per share, which surpassed the Zacks Consensus Estimate by 85.6% on the back of reduced expenses and operational excellence.

THC expects its net operating revenues for the second quarter in the $4.8-$5 billion band. Tenet Healthcare projects adjusted EBITDA between $800 million and $850 million for the June quarter.