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Acadia Healthcare (ACHC) Up 13.7% 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 13.7% 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 Q1 Earnings and Revenues

Acadia Healthcare reported first-quarter 2018 adjusted earnings of 52 cents per share, which beat the Zacks Consensus Estimate by 8.33%. Moreover, earnings improved 13% year over year.

Earnings also flew above the company’s guidance of 47 cents to 49 cents.
Better-than-expected earnings were driven by revenue growth led by the addition of beds.

Quarter Details

Acadia Healthcare’s revenues rose 9.3% to $742 million from the prior-year quarter and surpassed the Zacks Consensus Estimate by 1.89%.

Total same facility revenues grew 5.6% with a 2% increase in patient days and a 3.5% rise in revenues per patient day. The growth can be attributed to the addition of more than 57 new beds to the existing facilities. The company expects to add more than 800 beds to existing and new facilities in 2018.
U.S. same facility revenues were up 6.1% from the year-ago quarter. The company also recorded a 2% increase in patient days year over year, and a 4.0% increase in revenue per patient day.

U.K. same facility revenues rose 4.6% year over year to $236.4 million. The number of patient days inched up 1.9% from the year-ago quarter, and revenue per patient per day was up 2.6%.

Acadia Healthcare’s consolidated adjusted EBITDA was $145.7 million, up 6.9% year over year.

Total expenses increased 10% year over year to $694 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 Mar 31, 2018 were $57.8 million, down 14.1% from the 2017-end level.

Long-term debt was $3.21 billion as of Mar 31, 2018, almost unchanged from the 2017-end level.

Net cash provided by operating activities at the end of the first quarter was $72.35 million, up 27% year over year.

2018 Guidance

For 2018, the company expects adjusted earnings per share between $2.58 and $2.62 (versus $2.42 and $2.48 earlier) on revenues of $3.04-$3.08 billion (unchanged). Adjusted EBITDA stayed unchanged and 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 16% (versus 21% as anticipated earlier).

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. There have been seven revisions higher for the current quarter. Last month, the consensus estimate has shifted by 5.5% due to these changes.

Acadia Healthcare Company, Inc. Price and Consensus

 

VGM Scores

At this time, ACHC has a nice Growth Score of B, a grade with the same score on the momentum front. Following the exact same course, the stock was also allocated a grade of B on the value side, putting it in the second quintile 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 equally suitable for value, growth, and momentum investors.

Outlook

Estimates have been trending upward for the stock and the magnitude of these revisions looks promising. 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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