Acadia Healthcare Company, Inc. (NASDAQ:ACHC) Q3 2024 Financial Results

Acadia Healthcare Company, Inc. reported a solid third quarter in 2024, with an 8.7% increase in total revenue, reaching $816 million. This growth was mainly attributed to patient day growth and rate improvements. Adjusted EBITDA also saw a rise of 10.5%, amounting to $194.3 million. Despite facing legal inquiries and a temporary dip in patient day growth in October, the company is expanding its bed capacity and expects continued growth in the coming years.

Key Takeaways

• Total revenue for Q3 2024 increased by 8.7% year-over-year to $816 million.
• Adjusted EBITDA grew 10.5% to $194.3 million.
• Acadia plans to add approximately 1,200 new beds in 2024, with major expansions in partnerships and new facilities.
• The company is investing in over 2,000 additional beds to address the demand for behavioral health services.
• Adjusted earnings per diluted share for 2024 are projected between $3.35 and $3.45.
• Revenue guidance for 2024 has been updated to $3.15 billion to $3.165 billion.
• Acadia may close underperforming locations, including recent closures of two satellite programs.
• Positive reimbursement developments are anticipated, especially in Tennessee.
• Staffing remains stable despite legal scrutiny, with new quality improvement measures implemented.

Company Outlook

• Acadia is investing significantly to meet the growing need for behavioral health services in the U.S.
• The company expects to complete 1,200 new beds this year and over 2,000 in the next two years.
• Revenue guidance for 2024 revised due to lower-than-expected volume growth in October.
• Acadia anticipates sustained volume growth from new beds and favorable reimbursement developments.

Bearish Highlights

• Temporary slowdown in patient day growth to around 3% in October.
• Expected EBITDA decrease of $10 million to $15 million from lower patient day growth and other factors.
• Anticipating a $20 million to $30 million revenue decrease.
• Noted issues with referral management since late August.

Bullish Highlights

• The inpatient psychiatric sector is underfunded; an estimated requirement for 75,000 additional beds exists.
• Acadia's expansion plans aim to significantly increase bed capacity.
• Positive discussions with payers, particularly in Tennessee, could enhance reimbursement rates.
• Wage inflation has stayed below 5%, indicating effective cost management.

Misses

• Revised 2024 guidance reflects a reduction in anticipated revenue and EBITDA.
• Volume growth in October didn't meet expectations, potentially impacting year-end financials.
• Closure of underperforming satellite facility beds.

Q&A Highlights

• Management is addressing referral management issues without a clear recovery timeline.
• Legal scrutiny has not adversely impacted staffing significantly.
• Wage inflation development remains below 5%.
• Ongoing legal matters details are limited; Acadia has enhanced its legal team.

Acadia Healthcare continues to navigate a complex environment with strategic investments and a focus on expanding access to behavioral health services. While challenges persist, its commitment to growth and quality care remains strong. With a robust financial standing and a strategic expansion plan, Acadia Healthcare is poised to meet the increasing demands of the behavioral health sector in the forthcoming years.

InvestingPro Insights

• Acadia's stock has faced pressure, with a 16.73% decline in the past week and a 32.74% drop over the last month.
• Despite these challenges, the company's revenue growth is solid, with a 9.13% increase over the last twelve months as of Q3 2024.
• Analysts anticipate profitability this year, aligning with adjusted earnings guidance of $3.35 to $3.45.
• Valuation metrics present a mixed outlook, but the recent price drop might indicate a buying opportunity as per the Relative Strength Index (RSI).

Full Transcript – Acadia Healthcare Company Inc (ACHC) Q3 2024

Operator

Good day, and welcome to Acadia Healthcare's Third Quarter of 2024 Earnings Call. All participants will be in a listen-only mode for the duration of the call. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Also, please be aware that today's call is being recorded. I would now like to turn the call over to Patrick Feeley, Head of Investor Relations. Please go ahead.

Patrick Feeley

Thank you, and good morning. Yesterday after the market closed, we issued a press release announcing our third quarter 2024 financial results. This press release can be found in the Investor Relations section of the acadiahealthcare.com website. Here with me today to discuss the results are Chris Hunter, Chief Executive Officer; and Heather Dixon, Chief Financial Officer. To the extent any non-GAAP financial measure is discussed in today's call, you will also find a reconciliation of that measure to the most directly comparable financial measure, calculated according to GAAP in the press release that is posted on our website, as well as the 10-Q filed yesterday afternoon. This conference call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding Acadia's expected financial performance for 2024 and beyond. These statements may be affected by important factors set forth in Acadia's SEC filings. Now, I’d like to turn the call over to Chris.

Chris Hunter

Thank you, Patrick, and good morning, everyone. Thank you for being with us for Acadia's third quarter 2024 conference call. We have a lot to cover today, but I want to begin with our results and key highlights of the quarter. I'll provide a broader update on our quality standards, followed by a legal update, and then discuss our efforts to drive outcomes for our vulnerable patient populations.

During the third quarter, we reported strong results with total revenue of $816 million, representing growth of 8.7% over Q3 2023, driven by both rate improvement and patient day growth. This top line growth combined with solid operating leverage led to adjusted EBITDA growth of 10.5%. We've made consistent progress against our bed growth targets, expecting to complete construction on approximately 1,200 beds this year. We are focused on providing compassionate care that improves lives and inspires hope. Given the significant unmet need in behavioral health, our commitment to quality, safety, and compliance is paramount. We believe responsible patient care is foundational to our mission.

With respect to recent media reports about Acadia’s operations, we emphasize that patient care decisions are made by licensed providers in accordance with legal requirements. The average length of stay across Acadia's hospitals is in line with industry averages. As we continue to meet the crucial clinical demands of our patient population, we are also investing in significant technology to enhance patient and staff safety.

Regarding our legal matters, we received voluntary requests for information from the U.S. Attorney's Office as well as subpoenas related to admissions and billing practices. While some requests have been withdrawn, we remain engaged and committed to cooperating with federal agencies.

Heather Dixon

Thanks, Chris, and good morning. In the third quarter, we reported $816 million in revenue, up 8.7% year-over-year. Adjusted EBITDA increased 10.5% to $194.3 million. We continue focusing on maintaining a strong financial position while investing strategically in our operations. We have revised our 2024 guidance due to lower-than-expected volume growth and anticipate obstacles in the fourth quarter due to recent press coverage impacting patient volumes.

Chris Hunter

In closing, I want to thank our dedicated employees who continue to meet the needs of our patients effectively. We remain committed to improving care quality and expanding access to our services. Thank you for your interest in Acadia.

Operator

The conference has now concluded. Thank you for attending. You may now disconnect your lines.

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