Acadia Healthcare(US:ACHC)2025-11-11 20:45Acadia 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]