Acadia Healthcare’s Earnings Call: Mixed Sentiments and Strategic Moves

Acadia Healthcare Company, Inc. ((ACHC)) has held its Q3 earnings call. Read on for the main highlights of the call.

The recent earnings call for Acadia Healthcare Company, Inc. painted a mixed picture of the company’s current standing and future prospects. While there were positive notes regarding revenue growth and bed expansion, the sentiment was tempered by challenges such as reduced EBITDA guidance, softness in Medicaid volumes, increased expenses, and facility closures.

Revenue Growth

Acadia Healthcare reported a revenue of $851.6 million, marking a 4.4% increase over the third quarter of the previous year. This growth reflects the company’s ability to expand its market presence and capitalize on its service offerings, despite facing industry-wide challenges.

Bed Expansion

The company has been proactive in its expansion strategy, adding over 1,700 beds across 2024 and 2025, with plans to add another 500 to 700 beds in 2026. This expansion is a testament to Acadia’s commitment to increasing its capacity to meet growing demand.

Improvement in Employee Retention

Acadia has achieved its sixth consecutive quarter of improvement in employee retention. This trend is crucial for maintaining operational stability and ensuring the delivery of high-quality care.

Positive Clinical Outcomes

A recently opened joint venture facility reported significant improvements in clinical outcomes, including a 47% reduction in depressive and anxiety symptoms and a 34% improvement in quality of life. These results highlight the effectiveness of Acadia’s clinical programs.

Reduction in EBITDA Guidance

The company has revised its adjusted EBITDA guidance for 2025, lowering it to a range of $650 million to $660 million from the previously issued $675 million to $700 million. This adjustment reflects the financial pressures the company is facing.

Softness in Medicaid Volumes

Acadia experienced softer-than-expected volumes in its Medicaid business, particularly in the acute care segment, with same-facility volume growth at a modest 1.3%. This softness has impacted the company’s overall performance.

Increased Expenses and Bad Debt

The company is grappling with increased expenses, including bad debts, professional and general liability expenses, and employee healthcare costs, which have added to its financial challenges.

Facility Closures

Acadia ceased operations at five facilities that no longer aligned with its strategic priorities, including one acute care and one specialty facility. This move is part of the company’s efforts to streamline operations and focus on more profitable ventures.

Legal and Professional Liability Costs

The company reported $39 million in costs related to government investigations in the third quarter, although this was a reduction from previous quarters. Managing these costs remains a priority for Acadia.

Forward-Looking Guidance

Looking ahead, Acadia has adjusted its 2025 EBITDA forecast to reflect current challenges, with a focus on reducing capital expenditures by at least $300 million in 2026. The company aims to generate positive adjusted free cash flow for the full year 2026, despite pressures from managed care companies and uncertain Medicaid funding. Acadia’s plans to add new beds and its commitment to quality initiatives, as evidenced by improved clinical outcomes, are central to its forward strategy.

In summary, Acadia Healthcare’s earnings call highlighted a blend of growth and challenges. While revenue and expansion efforts are promising, the company must navigate financial pressures and operational hurdles. The overall sentiment was mixed, with a cautious outlook for the future.