It has been about a month since the last earnings report for Acadia Healthcare (ACHC - Free Report) . Shares have lost about 15.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Acadia Healthcare due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Acadia Healthcare Misses on Q3 Earnings, Trims View
Acadia Healthcare Company, Inc. (ACHC - Free Report) reported third-quarter 2018 adjusted earnings of 55 cents per share, which missed the Zacks Consensus Estimate by 15%. The bottom line also declined 5.2% year over year.
Earnings missed due to rise in expenses that negatively impacted EBITDA margin.
In the reported quarter, revenues rose 6.2% year over year to $760.9 million. However, the top line fell short of the Zacks Consensus Estimate by 0.3%.
Total same facility revenues grew 6.2% with a 2.4% increase in patient days and a 3.8% rise in revenues per patient day.
U.S. same facility revenues were up 7.2% year over year to $478.9 million.
The company also recorded a 3.3% increase in patient days year over year and 3.8% growth in revenue per patient day.
U.K. same facility revenues rose 4.4% year over year to $245.4 million. The number of patient days inched up 1.3% from the year-earlier period while revenues per patient per day improved 3.1%.
Total same facility EBITDA margin contracted 100 basis points year over year to 23.9%.
Total expenses increased 7.7% year over year to $705.9 million, courtesy of higher salaries, professional fees, supplies, wages and benefits, interest expenses, depreciation and amortization as well as rents and leases.
During the third quarter, Acadia Healthcare added 132 beds to existing facilities, bringing the total up to 806 beds added to new and existing facilities since the end of third-quarter 2017.
Cash and cash equivalents as of Sep 30, 2018 were $48.9 million, down 27.3% from the 2017-end level.
Long-term debt amounted to $3.18 billion as of Sep 30, 2018, up 0.7% from the 2017-end level.
Net cash provided by operating activities at the end of nine months was $286.2 million, up nearly 5.5% year over year.
2018 Guidance Lowered
For 2018, the company expects adjusted earnings per share between $2.25 and $2.27 (down from the previous projection of $2.52-$2.56) on revenues of approximately $3 billion (down from the earlier estimate of $3.02-$3.06 billion). Adjusted EBITDA is anticipated between $605 million and $610 million (compared with the former forecast of $632-$639 million).
Furthermore, the company expects to add more than 800 beds to existing and new facilities in 2018.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -27.53% due to these changes.
At this time, Acadia Healthcare has a subpar Growth Score of D, a grade with the same score on the momentum front. However, the stock was 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Acadia Healthcare has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.