Yahoo Finance Acadia Healthcare (ACHC) Up 0.9% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Acadia Healthcare (ACHC). Shares have added about 0.9% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Acadia Healthcare due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Acadia Healthcare Q1 Earnings Beat, Revenues Up Y/Y
Acadia Healthcare reported adjusted first-quarter earnings of 84 cents per share, which surpassed the Zacks Consensus Estimate by 5%. The bottom line rose 12% year over year.
Total revenues of $768.1 million improved 9.1% year over year. Yet, the top line fell short of the consensus mark by 1.2%.
The quarterly earnings benefited from improved patient days while sustained demand for behavioral health services and impressive growth-related initiatives remained other tailwinds for the company. This was partially offset by a decline in admissions, which remain the most significant contributor to a healthcare facility operator’s top line. Additionally, an elevated expense level resulting from higher salaries, wages and benefits led to the downside as well.
Q1 Operations
Same-facility revenues amounted to $756.3 million, which advanced 9.2% year over year but missed the Zacks Consensus Estimate and our estimate of $766 million. The year-over-year growth resulted from a 6.9% improvement in revenue per patient day and a 2.2% rise in patient days. However, admissions slid 1.7% year over year. The average length of stay rose 4% year over year, higher than our growth estimate of 2.6%.
In the overall facility, patient days grew 1.8% while admissions decreased 1.7% year over year. Revenue per patient day advanced 7.1% year over year, which beat our growth estimate of 4.6%. The average length of stay grew 3.6% year over year, higher than our growth estimate of 2.3%.
Adjusted EBITDA of $173.9 million rose 14.9% year over year and outpaced our estimate of $171 million. Adjusted EBITDA margin improved 110 basis points year over year to 22.6%.
Total expenses of $669.2 million increased 8.2% year over year due to higher salaries, wages and benefits, professional fees, other operating costs, and interest expenses. However, the metric fell short of our estimate of $674.1 million.
Financial Update (As of Mar 31, 2024)
Acadia Healthcare exited the first quarter with cash and cash equivalents of $77.3 million, which dropped 22.8% from the 2023-end level. It had a leftover capacity of $371.5 million under its $600 million revolving credit facility at the quarter end.
Total assets of $5.5 billion increased 3% from the figure at 2023 end.
Long-term debt amounted to $1.8 billion, which climbed 33.6% from the figure as of Dec 31, 2023. The current portion of long-term debt was $61.5 million.
Total equity of $2.9 billion rose 3% from the 2023-end level. The net leverage ratio was around 2.6X at the quarter end.
Net cash used in operations totaled $321.3 million against net cash generated from operating activities of $44.4 million in the prior-year quarter.
Business Update
Acadia Healthcare added 27 beds to its existing facilities in the first quarter. It also inaugurated one specialty de novo facility, named Sabal Palms Recovery Center, in Florida. The company added 15 outpatient programs. Additionally, it completed the Turning Point Centers buyout in February 2024. It also purchased three comprehensive treatment centers in North Carolina in March 2024.
Acadia Healthcare also initiated construction work on two joint venture hospitals, one in partnership with Orlando Health in Florida and the other one in alliance with Tufts Medicine across Massachusetts.
2024 Guidance Reiterated
Revenues are anticipated to lie between $3.18 billion and $3.25 billion. Adjusted EBITDA is estimated to be in the range of $730-$770 million.
Adjusted earnings per share (EPS) are forecast between $3.40 and $3.70 in 2024, the mid-point of which implies a rise of 3.2% from the 2023 figure.
Interest expenses are estimated within $110-$120 million. Depreciation and amortization expenses are anticipated in the $150-$160 million band. The tax rate is expected within 24.5-25.5%. Stock compensation expenses are projected to lie between $40 million and $45 million.
Operating cash flows are forecasted within $525-$575 million for 2024. Expansion capital expenditure is anticipated between $425 million and $475 million. Maintenance and IT capital expenditures are expected to be in the range of $90-$110 million.
Management estimates to add more than 400 beds to existing facilities in 2024. It targets to inaugurate a maximum of 14 CTCs this year.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -6.65% due to these changes.
VGM Scores
Currently, Acadia Healthcare has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Acadia Healthcare has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Acadia Healthcare is part of the Zacks Medical - Hospital industry. Over the past month, Universal Health Services (UHS), a stock from the same industry, has gained 9.4%. The company reported its results for the quarter ended March 2024 more than a month ago.
Universal Health Services reported revenues of $3.84 billion in the last reported quarter, representing a year-over-year change of +10.9%. EPS of $3.70 for the same period compares with $2.34 a year ago.
Universal Health Services is expected to post earnings of $3.26 per share for the current quarter, representing a year-over-year change of +28.9%. Over the last 30 days, the Zacks Consensus Estimate has changed +0.2%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Universal Health Services. Also, the stock has a VGM Score of A.
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Acadia Healthcare Company, Inc. (ACHC) : Free Stock Analysis Report
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