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Acadia Healthcare (ACHC) Gains From Expansion Initiatives

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Acadia Healthcare Company, Inc. (ACHC - Free Report) remains well-poised for growth on the back of solid top-line growth, continuous addition of facilities to its existing network and robust liquidity position. A strong 2023 outlook reinforces growth prospects of the stock.

Let’s delve deeper.

Earnings Surprise History

Acadia Healthcare boasts a decent earnings surprise record. It has outpaced the Zacks Consensus Estimate in two of the trailing four quarters, matched once and missed once, the average surprise being 2.51%.

Solid 2023 Outlook

ACHC boasts an impressive business outlook for 2023. Revenues are anticipated to be between $2.82 billion and $2.88 billion, the mid-point of which indicates an improvement of 9.2% from 2022 reported figure.  

Adjusted EBITDA is estimated between $635 million and $675 million, the mid-point of which implies a rise of 6.5% from 2022 figure.

Adjusted earnings per share are projected in the range of $3.10-$3.40, the mid-point of which suggests 8% growth from the reported figure of 2022.

Sustained Top-Line Growth

Revenues of Acadia Healthcare continue to benefit on the back of a strong U.S. business that is currently gaining from solid patient volumes and operational efficiencies. A credible healthcare services portfolio that can be availed at ACHC’s acute inpatient psychiatric facilities, specialty treatment facilities, comprehensive treatment centers (CTCs) and residential treatment centers are likely to pave long-term growth for ACHC.

Continued incidence of mental health issues among Americans is expected to sustain the solid demand for behavioral healthcare services. This, in turn, is likely to provide an impetus to the top line of ACHC in the days ahead.

Expansion Endeavors

Acadia Healthcare pursues an impressive growth strategy by pursuing buyouts or joint ventures with renowned U.S. healthcare systems. Such initiatives equip ACHC to inaugurate new facilities or add beds to its existing facilities. In addition to enhancing revenues, these growth-related efforts have diversified ACHC’s healthcare network.

The portfolio of Acadia Healthcare comprised 250 behavioral healthcare facilities across 39 states and Puerto Rico as of Dec 31, 2022. The year, 2023, is likely to exhibit another strong year for ACHC as it aims to add roughly 300 beds to its existing facilities. Also, it anticipates to open two inpatient de novo facilities, two JV facilities and a minimum of six CTCs.

Though such growth-related efforts result in significant investments and escalates costs for the healthcare provider, the same is expected to sustain its long-term growth.

Financial Position

Acadia Healthcare boasts a strong financial position, substantiated by sufficient cash reserves and had nearly $525 million available under its $600 million revolving credit facility at December 2022-end. Solid cash generating abilities equip ACHC to pursue uninterrupted growth-related initiatives. A sound financial position is of dire need for healthcare companies pursuing continuous business growth investments.

Similar to Acadia Healthcare, other medical stocks such as Tenet Healthcare Corporation (THC - Free Report) , HCA Healthcare, Inc. (HCA - Free Report) and Community Health Systems, Inc. (CYH - Free Report) pursue continuous expansion plans for bolstering their healthcare portfolios.

Tenet Healthcare pursued numerous acquisitions and partnerships with an aim to expand scale of business, operating capacity and geographical presence. THC operated an expansive care network of 61 hospitals and other healthcare facilities totaling above 575 at the end of 2022.

HCA Healthcare is committed to undertaking acquisitions, which have led to addition and expansion of facilities across several markets as well as boosted patient volumes. It spends a substantial amount on acquisitions each year. HCA currently operated 182 hospitals across 20 states and England as of Dec 31, 2022.

Community Health has relied on acquisitions and partnerships to bolster medical service offerings, business scale and nationwide presence. At 2022 end, CYH subsidiaries owned or lease 80 affiliated hospitals containing around 13,000 beds. The units also operated 1,000-plus sites of care ranging from physician practices, urgent care centers, freestanding emergency departments to occupational medicine clinics.

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