Acadia Healthcare’s Earnings Call: Growth Amid Challenges

Acadia Healthcare Company, Inc. ((ACHC)) has held its Q2 earnings call. Read on for the main highlights of the call.

Acadia Healthcare’s recent earnings call presented a mixed sentiment, reflecting both positive strides and notable challenges. The company showcased its continued revenue growth and bed expansion efforts, alongside successful partnerships and quality initiatives. However, it also faced hurdles such as declining Medicaid volumes, underperforming facilities, and increased start-up costs, which tempered the overall positive outlook.

Strong Revenue Growth

Acadia Healthcare reported a robust financial performance with total revenue reaching $869.2 million, marking a 9.2% increase compared to the second quarter of the previous year. The company’s adjusted EBITDA also saw a healthy rise of 7.5% year-over-year, amounting to $201.8 million, underscoring its strong revenue growth trajectory.

Bed Expansion

In a bid to enhance its service capacity, Acadia added a total of 479 beds in the first half of 2025. This expansion included 101 beds in existing facilities and 288 in newly constructed ones, with plans to add between 950 and 1,000 beds by the end of the year, reflecting its commitment to accommodating growing demand.

Tennessee Supplemental Payment Program

Acadia benefited significantly from the state of Tennessee’s new Directed Payment Program, which resulted in a favorable pretax benefit of $51.8 million for the quarter. This program has positively impacted the company’s financials, providing a substantial boost.

Commercial and Medicare Volume Growth

The company experienced notable growth in commercial and Medicare volumes, which increased by 9% and 8% year-over-year, respectively. This growth highlights Acadia’s ability to attract and serve a diverse patient base, contributing positively to its revenue streams.

Quality Initiatives and Technology Investments

Acadia continues to prioritize patient safety and quality care through strategic investments in technology and data analytics. These efforts have resulted in strong patient satisfaction and clinical outcomes, reinforcing the company’s commitment to high-quality healthcare services.

Medicaid Volume Decline

Despite the positive trends in other areas, Acadia faced a slight decline in Medicaid volumes at acute care hospitals. This decline is attributed to evolving utilization patterns and elevated cost pressures, which have impacted overall volume growth.

Underperforming Facilities

A handful of underperforming facilities have negatively affected Acadia’s same-facility results, with a $3 million worse-than-expected impact on EBITDA. Addressing these underperforming locations remains a priority for the company.

Start-up Losses

The company reported start-up losses of $14.2 million related to recently opened facilities, a significant increase from $4.6 million in the second quarter of 2024. This rise in start-up losses reflects the challenges associated with expanding operations.

Higher Than Expected Start-Up Costs

Acadia anticipates start-up costs to increase to $60 million-$65 million for the full year, driven by an accelerated pace of new facility openings. This increase poses a challenge to the company’s financial performance.

Operating Cash Flow and Legal Costs

The company revised its operating cash flow guidance downward by $12 million, citing significant legal costs related to government investigations. These legal expenses have added pressure to Acadia’s financial outlook.

Forward-Looking Guidance

Looking ahead, Acadia Healthcare projects gross revenue of approximately $230 million from Medicaid supplemental programs for 2025. Despite some facility underperformance and a slight decline in Medicaid volumes, the company expects its full-year EBITDA to range between $675 million and $700 million. This guidance reflects a balance between lower expected volume growth and higher start-up costs, offset by increased supplemental payments.

In conclusion, Acadia Healthcare’s earnings call painted a picture of a company navigating both growth and challenges. While revenue and bed expansion efforts are commendable, issues like Medicaid volume declines and increased start-up costs present hurdles. The company’s forward-looking guidance suggests cautious optimism, with expectations for continued revenue growth supported by strategic initiatives and partnerships.