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]

Revenue Performance - Revenue for the three months ended September 30, 2025, was $851.57 million, a 4.7% increase compared to $815.63 million for the same period in 2024[120] - For the nine months ended September 30, 2025, revenue reached $2.49 billion, up from $2.38 billion in 2024, reflecting a growth of 4.7%[120] - Revenue increased by $35.9 million, or 4.4%, to $851.6 million for the three months ended September 30, 2025, compared to $815.6 million for the same period in 2024[124] - Revenue for the nine months ended September 30, 2025, increased by $111.6 million, or 4.7%, to $2,491.3 million from $2,379.7 million in 2024[139] - Total revenue for the nine months ended September 30, 2025, was $2.49 billion, an increase from $2.38 billion in 2024, with Medicaid contributing 57.5% of total revenue[154] Cost and Expense Analysis - Salaries, wages, and benefits accounted for 54.3% of total revenue in Q3 2025, compared to 52.5% in Q3 2024[120] - Salaries, wages, and benefits (SWB) expense rose to $462.2 million for the three months ended September 30, 2025, an increase of $34.1 million from $428.1 million in 2024, representing 53.6% of revenue[125] - Professional fees were $51.5 million for the three months ended September 30, 2025, or 6.0% of revenue, compared to $48.5 million, or 5.9% of revenue, in the same period of 2024[127] - Other operating expenses increased to $128.8 million, or 15.1% of revenue, for the three months ended September 30, 2025, compared to $112.1 million, or 13.8% of revenue, in 2024[130] - Interest expense increased to $100.9 million for the nine months ended September 30, 2025, compared to $86.3 million in 2024, primarily due to interest on the 7.375% Senior Notes issued in early 2025[146] - Transaction, legal, and other costs surged to $138.4 million for the nine months ended September 30, 2025, compared to $17.2 million in 2024[149] Income and Profitability - The net income attributable to Acadia Healthcare Company, Inc. for Q3 2025 was $36.25 million, a decrease from $68.13 million in Q3 2024[120] - The provision for income taxes for the three months ended September 30, 2025, was $1.7 million, reflecting an effective tax rate of 4.2%, a decrease from $27.2 million and 27.6% in 2024[136] - The provision for income taxes for the nine months ended September 30, 2025, was $18.1 million, reflecting an effective tax rate of 17.5%, down from $72.9 million and 24.0% in 2024[151] - Revenue for the nine months ended September 30, 2025, was $2,011.1 million, with a net income of $24.1 million[180] Operational Metrics - Same facility revenue growth for the three months ended September 30, 2025, was 3.7%, while for the nine months it was 5.1%[121] - Patient days growth was 1.3% for Q3 2025 and 1.8% for the nine months ended September 30, 2025[121] - The average length of stay decreased by 1.9% for Q3 2025 compared to the same period in 2024[121] - Same facility revenue increased by $29.5 million, or 3.7%, driven by a 2.3% growth in revenue per day, 1.3% growth in patient days, and 3.3% growth in admissions[124] Capital and Financing Activities - Cash provided by operating activities for the nine months ended September 30, 2025, was $218.2 million, a substantial increase from $13.0 million in 2024[157] - Cash used in investing activities for the nine months ended September 30, 2025, was $463.8 million, down from $533.1 million in 2024, primarily due to capital expenditures of $478.6 million[158] - Cash provided by financing activities for the nine months ended September 30, 2025, was $288.0 million, compared to $502.2 million in 2024, with significant borrowings on long-term debt of $1.2 billion[159] - The company entered into a Credit Agreement providing for a $1.0 billion Revolving Facility and a $650.0 million Term Loan Facility, both maturing on February 28, 2030[163] - The Term Loan Facility requires quarterly principal repayments starting at $4.0 million, increasing to $16.2 million by June 2029[165] - As of September 30, 2025, the Consolidated Total Net Leverage Ratio was 3.4x, in compliance with all financial covenants[169] - Long-term debt as of September 30, 2025, was $2,284.8 million, an increase from $1,880.1 million as of December 31, 2024[180] - The company issued $550.0 million of 7.375% Senior Notes due 2033 on March 10, 2025, to pay down outstanding borrowings under the Revolving Facility[176] Compliance and Regulatory Matters - For the nine months ended September 30, 2025, total costs related to government investigations amounted to $123.3 million, a significant increase from $5.6 million in the same period of 2024[150] - Total obligations and commitments as of September 30, 2025, amounted to $3,162.4 million[181] Cash and Liquidity - Total available cash and cash equivalents increased to $118.7 million as of September 30, 2025, from $76.3 million at December 31, 2024[161] - Current assets increased to $532.8 million as of September 30, 2025, from $436.6 million as of December 31, 2024[180] - The company had $786.7 million of availability under the Revolving Facility as of September 30, 2025[170] Interest Rate Sensitivity - A hypothetical 1% increase in interest rates would decrease pretax income by approximately $8.5 million annually[184]

Financial Performance - Third quarter revenue totaled $851.6 million, reflecting a 4.4% increase year-over-year[4] - Net income attributable to Acadia was $36.2 million, or $0.40 per diluted share, down from $0.74 per diluted share in the prior-year period[4] - Adjusted EBITDA for the quarter was $173.0 million, down from $194.3 million in the prior-year period[8] - Revenue for the three months ended September 30, 2025, was $851,573,000, representing a 4.4% increase from $815,634,000 in the same period of 2024[30] - Net income attributable to Acadia Healthcare Company, Inc. for the three months ended September 30, 2025, was $36,246,000, down from $68,132,000 in the same period of 2024, reflecting a decrease of 46.8%[30] - Adjusted EBITDA for the three months ended September 30, 2025, was $210,779,000, a decrease of 8.4% compared to $230,091,000 in the same period of 2024[37] - Adjusted income attributable to Acadia Healthcare Company, Inc. for Q3 2025 was $64,828 thousand, down 22.9% from $84,079 thousand in Q3 2024[40] - Adjusted income per diluted share for Q3 2025 was $0.72, compared to $0.91 in Q3 2024, representing a decline of 20.9%[40] Operational Metrics - Same facility revenue increased by 3.7%, driven by a 2.3% rise in revenue per patient day and a 1.3% increase in patient days[4] - Acadia added 429 new beds in the third quarter, with a total of 908 beds added in the first nine months of 2025[12] - Patient days for the three months ended September 30, 2025, were 830,165, an increase of 1.8% from 815,126 in the same period of 2024[37] - Admissions for the three months ended September 30, 2025, increased by 5.7% to 54,450 from 51,513 in the same period of 2024[37] - The average length of stay decreased to 15.2 days for the three months ended September 30, 2025, down from 15.8 days in the same period of 2024, a decline of 3.6%[37] Guidance and Expectations - The company is lowering its full-year revenue guidance to a range of $3.28 billion to $3.30 billion, down from $3.30 billion to $3.35 billion[4] - The company expects startup losses in the range of $60 million to $65 million for the year[23] Financial Position - As of September 30, 2025, Acadia had $118.7 million in cash and cash equivalents and $786.7 million available under its revolving credit facility[19] - Total current assets increased to $747,956,000 as of September 30, 2025, from $577,492,000 as of December 31, 2024, marking a 29.5% increase[32] - Cash and cash equivalents at the end of the period were $118,693,000, up from $76,305,000 at the beginning of the period, indicating a 55.6% increase[34] - Long-term debt as of September 30, 2025, was $2,284,773,000, an increase from $1,880,093,000 as of December 31, 2024, reflecting a 21.5% increase[32] - The company reported a net cash provided by operating activities of $218,191,000 for the nine months ended September 30, 2025, compared to $12,992,000 for the same period in 2024[34] Costs and Expenses - Transaction, legal, and other costs for Q3 2025 amounted to $42,919 thousand, significantly higher than $8,249 thousand in Q3 2024[40] - Interest expense for the nine months ended September 30, 2025, increased to $100,939 thousand, compared to $86,297 thousand in 2024, reflecting a rise of 16.9%[39] - Depreciation and amortization for the nine months ended September 30, 2025, was $143,495 thousand, up from $110,054 thousand in 2024, indicating a growth of 30.4%[39] Adjusted Metrics - Acadia excludes gains from facility property sales from Adjusted EBITDA as they are not indicative of ongoing operating results[58] - General and administrative costs related to corporate functions are excluded from Total Facility Adjusted EBITDA to present core operations performance[59] - Same Facility Adjusted EBITDA excludes amounts from newly developed and acquired facilities in operation for less than one year to provide comparable performance metrics[61] - The income tax effect of adjustments to income is based on tax rates of 19.8% and 26.3% for the three months ended September 30, 2025 and 2024, respectively[62]

Core Insights - The health care sector is experiencing a trend of oversold stocks, presenting potential buying opportunities for undervalued companies [1][2] Company Summaries - **Alvotech SA (NASDAQ:ALVO)**: Received an FDA Complete Response Letter for its AVT05 biosimilar application, leading to a revised outlook for 2025. The stock has fallen approximately 41% over the past month, with a 52-week low of $4.81. Current RSI is 18.8, and shares closed at $5.03 after a 34.3% drop [7] - **Acadia Healthcare Company Inc (NASDAQ:ACHC)**: Set to release third quarter 2025 results on November 5. The stock has decreased around 19% in the past month, with a 52-week low of $17.12. Current RSI is 27.9, and shares closed at $21.31 after a 0.9% decline [8] - **Akebia Therapeutics Inc (NASDAQ:AKBA)**: Reported inducement grants under Nasdaq Listing Rule 5635(c)(4). The stock has fallen about 33% over the past five days, with a 52-week low of $1.52. Current RSI is 29.4, and shares closed at $2.12 after a 4.1% drop [8]

Core Insights - The health care sector is experiencing a trend of oversold stocks, presenting potential buying opportunities for undervalued companies [1][2] Company Summaries - **Alvotech SA (NASDAQ:ALVO)**: Received an FDA Complete Response Letter for its AVT05 biosimilar application, leading to a revised outlook for 2025. The stock has fallen approximately 41% over the past month, with a 52-week low of $4.81. Current RSI is 18.8, and shares closed at $5.03 after a 34.3% drop [7] - **Acadia Healthcare Company Inc (NASDAQ:ACHC)**: Set to release Q3 2025 results on November 5. The stock has decreased around 19% in the past month, with a 52-week low of $17.12. Current RSI is 27.9, and shares closed at $21.31 after a 0.9% decline [8] - **Akebia Therapeutics Inc (NASDAQ:AKBA)**: Reported inducement grants under Nasdaq Listing Rule 5635(c)(4). The stock has fallen about 33% over the last five days, with a 52-week low of $1.52. Current RSI is 29.4, and shares closed at $2.12 after a 4.1% drop [8]

Core Viewpoint - Acadia Healthcare (ACHC) is anticipated to report a year-over-year decline in earnings despite an increase in revenues for the quarter ending September 2025, with the actual results being a significant factor influencing its near-term stock price [1][2]. Earnings Expectations - The upcoming earnings report is scheduled for November 5, and if the results exceed expectations, the stock may rise; conversely, a miss could lead to a decline [2]. - The consensus estimate for quarterly earnings is $0.72 per share, reflecting a year-over-year decrease of 20.9%, while revenues are projected to be $853.31 million, representing a 4.6% increase from the previous year [3]. Estimate Revisions - Over the last 30 days, the consensus EPS estimate has been revised 1.73% higher, indicating a collective reassessment by analysts [4]. - The Most Accurate Estimate for Acadia Healthcare is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -9.79%, suggesting a bearish outlook from analysts [12]. Earnings Surprise Prediction - The Zacks Earnings ESP model indicates that a positive or negative reading can predict the deviation of actual earnings from consensus estimates, with positive readings being more reliable [9][10]. - Acadia Healthcare currently holds a Zacks Rank of 4, which complicates the prediction of an earnings beat [12]. Historical Performance - In the last reported quarter, Acadia Healthcare was expected to post earnings of $0.71 per share but achieved $0.83, resulting in a surprise of +16.90% [13]. - Over the past four quarters, the company has exceeded consensus EPS estimates three times [14]. Conclusion - Acadia Healthcare does not appear to be a strong candidate for an earnings beat, and investors should consider additional factors when making decisions regarding the stock ahead of the earnings release [17].