Acadia Healthcare (ACHC) stock plunged 22% in Tuesday’s extended trading session after the behavioral healthcare services provider lowered its full-year earnings guidance, citing higher professional and general liability (PLGL) expenses. Investors were disappointed as earlier this month, the company had significantly lowered its 2025 outlook due to volume woes and increased liability expenses.
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Acadia Lowers Full-Year Earnings Guidance
Acadia now expects 2025 adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) in the range of $601 million to $611 million, down from the prior guidance of $650 million to $660 million. The revised outlook reflects an additional $49 million in PLGL expense identified by a third-party actuarial review.
Additionally, Acadia lowered its 2025 adjusted earnings per share (EPS) guidance to the range of $1.94 to $2.04 from the previous range of $2.35 to $2.45.
Acadia’s CFO Todd Young noted that during the Q3 earnings call, the company had already cautioned about additional PLGL pressure this year based on trends across the industry. However, the magnitude of the expense as revealed by the final actuarial report was higher than the company’s expectations.
Notably, Acadia attributed the 115% year-over-year jump in the estimated 2025 PLGL expense to $116 million to the following factors:
- Higher expected settlement costs for claims related to policy years prior to September 1, 2024
- A 168% year-over-year surge in claim frequency during the 2025 policy year (September 1, 2024, to August 31, 2025)
- Increase in incurred-but-not-reported (IBNR) reserves due to increased claims activity, and
- Less favorable reinsurance coverage terms compared to the prior years
Is Acadia Stock a Buy?
Currently, Wall Street has a Moderate Buy consensus rating on ACHC stock based on seven Buys and three Holds. The average ACHC stock price target of $25.56 indicates 55% upside potential.
