Acadia Healthcare Company Inc. (NASDAQ:ACHC) is one of the cheap US stocks to buy according to analysts. On November 18, KeyBanc lowered the firm’s price target on Acadia Healthcare to $30 from $35, while maintaining an Overweight rating on the shares. This sentiment was posted as KeyBanc cited the company’s Q3 2025 results and updated guidance. In its Q3 2025 earnings report, Acadia Healthcare reported a 4.4% increase in revenue for the quarter, which totaled $851.6 million. This was supported by initiat ...

Core Viewpoint - The company has agreed to settle shareholder litigation for $179 million without admitting any wrongdoing, aiming to resolve a long-standing legal issue dating back to 2018 [1][2]. Group 1: Settlement Details - The settlement amount is $179 million, expected to be finalized by the end of November [2]. - The payment will be funded through a combination of approximately $30 million [2]. Group 2: Background of the Case - The litigation stems from allegations of misleading statements regarding the company's business and financial performance from April 2014 to the end of 2018 [2]. - The company has consistently denied any wrongdoing throughout the litigation process [1].

Acadia Healthcare Company Conference Call Summary Company Overview - **Company**: Acadia Healthcare Company (NasdaqGS: ACHC) - **Date**: November 11, 2025 - **Speakers**: Chris Hunter (CEO), Todd Young (CFO) Key Points Legal Settlement - Acadia Healthcare has agreed to settle shareholder litigation for **$179 million** without admitting fault or liability, which has been ongoing since **2018** regarding misleading statements about business performance from **April 2014 to end of 2018** [2][3] Financial Performance - Results for 2025 have been **modestly below expectations**, prompting a revision in guidance [4] - The company added **1,700 beds** over the past few years, with **632 beds** contributing to same-store calculations in Q1 2026 [4][5] - Net leverage is expected to increase from **3.4x to approximately 3.65x**, which is considered manageable [3] Growth Strategy - Acadia is focused on capital deployment, planning to reduce **CapEx by $300 million** while still generating significant bed additions [5] - The company aims to unlock free cash flow and improve margins by closing underperforming facilities [6][12] Volume Trends and Managed Care - There has been pressure from managed care companies, particularly regarding pre-authorizations, impacting revenue per patient day despite a **3.3% same-store admission increase** [9][10] - The average length of stay is decreasing due to an increase in acute beds, which typically have shorter stays [9] Future Guidance - The fourth quarter of 2025 is expected to show deterioration compared to Q3, influenced by volume softness and elevated bad debt [12] - Startup losses are anticipated to decline in 2026, with contributions from new bed additions expected to drive growth [13] Market Dynamics - Acadia is experiencing increased scrutiny from payers, particularly in behavioral health, which has historically seen underinvestment [17][18] - The company is actively engaging with payers to demonstrate the value of their investments in quality infrastructure [17] Facility Closures - Acadia closed **five underperforming facilities** in 2025, with ongoing reviews of the remaining **278 facilities** [23][24] - The closures were driven by shifting market dynamics and persistent underperformance [28] Labor and Expense Environment - The labor market is stabilizing, with base wage inflation decreasing slightly [30] - Employee retention has improved over six consecutive quarters, reflecting successful workforce initiatives [30] Liability Expenses - Professional and general liability expenses are expected to remain a headwind, with adjustments made for under-accrued expenses in Q4 [32][33] Supplemental Payment Programs - Acadia anticipates **$22 million** of EBITDA upside from pending supplemental payment programs, which could be recognized in Q4 or early 2026 [34] Public Health Funding - The company is monitoring cuts to the Substance Abuse and Mental Health Services Administration (SAMHSA) but currently sees limited direct exposure [36] - Acadia is tracking opioid settlement dollars and is well-positioned for future RFPs [38][39] Closing Remarks - The management expresses confidence in the company's long-term strategy and the potential for future cash flow generation from existing capital investments [41] Additional Insights - Acadia's focus on quality care and partnerships with joint ventures is seen as a key driver for future growth [20][25] - The company remains committed to addressing the needs of patients with behavioral health issues, leveraging investments to improve outcomes and manage costs effectively [18][19]

Core Insights - Acadia Healthcare Company, Inc. will participate in the UBS Global Healthcare Conference from November 9 to 12, 2025, in Palm Beach Gardens, Florida [1] - An online webcast of the Company's presentation will be available on its website starting at 1:45 p.m. Central Time on November 11, 2025 [2] - Acadia is a leading provider of behavioral healthcare services in the U.S., operating 278 facilities with approximately 12,500 beds across 40 states and Puerto Rico as of September 30, 2025 [3] Financial Performance - For the third quarter of 2025, Acadia reported revenue of $851.6 million, marking a 4.4% increase compared to the same quarter in 2024 [6] - Same facility revenue increased by 3.7% year-over-year, with revenue per patient day rising by 2.3% and patient days increasing by 1.3% [6]

Core Insights - Acadia Healthcare Company, Inc. (ACHC) reported adjusted third-quarter earnings of 72 cents per share, exceeding the Zacks Consensus Estimate by 7.5%, but reflecting a year-over-year decline of 20.9% [1][9] - Total revenues increased by 4.4% year over year to $851.6 million, slightly surpassing the consensus mark by 0.4% [1][9] Financial Performance - Same-facility revenues reached $827.8 million, a 3.7% increase year over year, but fell short of the Zacks Consensus Estimate by 1.4% [3] - Patient days increased by 1.3%, while admissions grew by 3.3% year over year [3] - Average length of stay decreased by 1.9% year over year, missing the consensus estimate by 3.2% [3] - Total expenses rose by 13.2% year over year to $811.6 million, driven by higher salaries, wages, benefits, and other operating costs [4] Cash and Debt Position - As of September 30, 2025, Acadia Healthcare had cash and cash equivalents of $118.7 million, up from $76.3 million at the end of 2024 [5] - Long-term debt increased to $2.3 billion from $1.9 billion as of December 31, 2024 [6] - Total equity rose to $3.1 billion compared to the end of 2024 [6] Share Repurchase and Guidance - Year-to-date share repurchases totaled $50.4 million, with no buyback activity in the third quarter [7] - 2025 revenue guidance was revised down to a range of $3.28 to $3.30 billion, and adjusted EBITDA is now estimated between $650 million and $660 million [8][10] Industry Comparison - HCA Healthcare reported adjusted EPS of $6.96, surpassing estimates by 23.2% and showing a 42% year-over-year improvement [12] - Universal Health Services reported adjusted EPS of $5.69, exceeding estimates by 22.1% and reflecting a 53.4% year-over-year increase [13] - Community Health Systems posted adjusted earnings of $1.27 per share, beating estimates and improving from a prior-year loss [14]

Group 1 - The article emphasizes the importance of staying updated on stocks within the biotech, pharma, and healthcare sectors, highlighting key trends and catalysts that influence market valuations [1] - Edmund Ingham, a biotech consultant with over 5 years of experience, leads the Haggerston BioHealth investing group, which caters to both novice and experienced investors [1] - The investing group provides insights on catalysts, buy and sell ratings, product sales forecasts, integrated financial statements, discounted cash flow analysis, and market-specific analyses for major pharmaceutical companies [1]

Group 1 - The article discusses the importance of staying updated on stocks within the biotech, pharma, and healthcare industries, highlighting key trends and catalysts that drive valuations [1] - Edmund Ingham, a biotech consultant with over 5 years of experience, leads the Haggerston BioHealth investing group, which caters to both novice and experienced biotech investors [1] - The Haggerston BioHealth group provides insights on catalysts, buy and sell ratings, product sales forecasts, integrated financial statements, discounted cash flow analysis, and market-by-market analysis for major pharmaceutical companies [1]

Financial Data and Key Metrics Changes - The company reported revenue of $851.6 million for Q3 2025, a 4.4% increase compared to the same quarter last year [5][20] - Adjusted EBITDA was $173 million, down from $194.3 million in the prior year period, reflecting lower volumes and increased expenses [5][20] - Same facility volume growth was 1.3%, which was approximately 100 basis points below internal expectations [5][6] - Adjusted EBITDA guidance for 2025 was reduced to $650-$660 million from a previous range of $675 million-$700 million [6][24] Business Line Data and Key Metrics Changes - Same facility revenue grew 3.7% year over year, driven by a 2.3% increase in revenue per patient day and a 1.3% growth in patient days [20] - The company faced increased pressure on volumes, particularly in the Medicaid segment, impacting overall performance [6][30] Market Data and Key Metrics Changes - The company added 83 beds to existing facilities in Q3, bringing the year-to-date total to 274 beds added through expansions [22] - The company expects to add 500-700 beds in 2026, following the addition of over 1,700 beds in 2024 and 2025 [8][23] Company Strategy and Development Direction - The company is focusing on optimizing growth investments and its existing portfolio to improve financial performance amid increasing headwinds [7][12] - A comprehensive portfolio and capital allocation review led to a pause on several development projects that no longer projected acceptable returns [11][39] - The company aims to ensure a portfolio that meets patient demand while maximizing returns on investments [12][46] Management's Comments on Operating Environment and Future Outlook - Management acknowledged increasing headwinds in the operating environment, particularly regarding pressures on managed care companies and Medicaid funding uncertainty [6][7] - The company remains confident in its strategy to deliver strong clinical outcomes and expects to see benefits from recent investments in quality and technology [26][52] Other Important Information - The company expects full-year 2025 startup losses to be in the range of $60 million-$65 million, with a modest decrease anticipated in 2026 [21][24] - Legal expenses related to government investigations were $39 million in Q3, down 28% from the previous quarter, with expectations for continued moderation [22][43] Q&A Session Summary Question: Can you provide more color on the challenges with payers, particularly in Medicaid? - Management noted that payer friction is more pronounced in Medicaid-heavy markets, with increased scrutiny on discharge criteria and more frequent utilization reviews [30][31] Question: How should we think about the durability of bad debts and denials as we move into 2026? - Management indicated that Q4 is seasonally slow, and while some pressures may persist, they expect a reduction in startup losses and other costs in 2026 [33][34] Question: Can you clarify the CapEx reduction and its implications for future bed openings? - The company plans to reduce CapEx by at least $300 million in 2026 while still opening multiple large facilities, as much of the capital for these projects has already been spent [39][41] Question: What is the expected impact of the five facility closures on EBITDA? - Management anticipates a mid-single-digit tailwind in 2026 from the closures, with a focus on ensuring returns on capital [45][46] Question: Can you provide insight into the $22 million in Medicaid supplemental benefits? - The company highlighted that Florida is a key state for these benefits, which could provide a significant run rate going forward [49]

Group 1 - Acadia Healthcare Company, Inc. (ACHC) has been added to the Zacks Rank 5 (Strong Sell) List due to a 3.2% downward revision in the consensus estimate for its current year earnings over the last 60 days [1] - Forward Air Corporation (FWRD) is also on the Zacks Rank 5 (Strong Sell) List, with a 12% downward revision in the consensus estimate for its current year earnings over the last 60 days [1] - Century Aluminum Company (CENX) has seen an 11.7% downward revision in the consensus estimate for its current year earnings over the last 60 days, leading to its inclusion in the Zacks Rank 5 (Strong Sell) List [2]

Core Insights - Acadia Healthcare reported quarterly earnings of $0.72 per share, exceeding the Zacks Consensus Estimate of $0.67 per share, but down from $0.91 per share a year ago [1] - The company achieved a revenue of $851.57 million for the quarter, surpassing the Zacks Consensus Estimate by 0.37% and up from $815.63 million year-over-year [3] Earnings Performance - The earnings surprise for the quarter was +7.46%, following a previous quarter where the company had a surprise of +16.9% [2] - Over the last four quarters, Acadia Healthcare has exceeded consensus EPS estimates three times [2] Stock Performance - Acadia Healthcare shares have declined approximately 47.9% year-to-date, contrasting with the S&P 500's gain of 15.1% [4] - The stock currently holds a Zacks Rank 4 (Sell), indicating expectations of underperformance in the near future [7] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.64 on revenues of $826.88 million, and for the current fiscal year, it is $2.46 on revenues of $3.31 billion [8] - The outlook for the Medical - Hospital industry is favorable, ranking in the top 20% of over 250 Zacks industries, which historically outperforms the bottom 50% by more than 2 to 1 [9]