Why Is Acadia Healthcare (ACHC) Down 18% Since Last Earnings Report?

It has been about a month since the last earnings report for Acadia Healthcare (ACHC). Shares have lost about 18% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Acadia Healthcare due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Acadia Healthcare Q2 Earnings Beat

Acadia Healthcare reported second-quarter 2019 adjusted earnings of 61 cents per share, beating the Zacks Consensus Estimate by 3.39% but declining 13% year over year.

Earnings reflected rise in revenues, which was more than offset by a higher increase in expenses.

Quarterly Details

Revenues of Acadia Healthcare rose 3% year over year to $789.4 million, but missed the Zacks Consensus Estimate by 1.1% year over year.

Total same facility revenues grew 5.7% with 1.7% increase in patient days and 3.9% rise in revenues per patient day.

U.S. same facility revenues were up 6.6% year over year to $494 million. The segment also recorded 3.3% year-over-year increase in patient days and 3.2% increase in revenues per patient day.

U.K. same facility revenues rose 3.9% year over year to $254 million. The number of patient days declined 0.2% from the year-earlier period whereas revenues per patient per day were up 4.1%.

Consolidated EBITDA margin was 24.7%, down 110 basis points year over year.

Total expenses increased 4.3% year over year to $729.6 million due to higher salaries, professional fees, supplies, wages and benefits, interest expenses, depreciation and amortization as well as rents and leases.

In the reported quarter, the company added 118 beds in total.

Financial Update

Cash and cash equivalents as of Jun 30, 2019 were $43.5 million, down 13.7% from the 2018     end     level.

Long-term debt was $3.21 billion as of Jun 30, 2019, up 1.5% from year-end 2018 levels.

Net cash provided by operating activities for the six months ended 2019 was $128.7 million, down 40% year over year.

2019 Guidance

For 2019, the company expects adjusted earnings per share between $2.15 and $2.23 on revenues of approximately $3.15-$3.175 billion.

Adjusted EBITDA is anticipated between $610 million and $620 million.

The company expects to add approximately 700 beds to existing and new facilities.
 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision. The consensus estimate has shifted -8.67% due to these changes.

VGM Scores

At this time, Acadia Healthcare has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. 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. It's no surprise Acadia Healthcare has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.

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