Acadia Healthcare (ACHC) Q3 Earnings Beat on Patient Volumes
Acadia Healthcare Company, Inc. ACHC reported third-quarter 2023 adjusted earnings of 91 cents per share, which outpaced the Zacks Consensus Estimate by 3.4%. The bottom line advanced 13.8% year over year.
Total revenues rose 12.5% year over year to $750.3 million in the quarter under review. The top line beat the consensus mark by 3.6%.
The quarterly results were aided by growing patient admissions and continuous expansion initiatives. Solid demand for behavioral health and substance use treatment led to the increased utilization of ACHC’s treatment options. However, the upside was partly offset by a significant increase in expenses.
Acadia Healthcare Company, Inc. Price, Consensus and EPS Surprise
Acadia Healthcare Company, Inc. price-consensus-eps-surprise-chart | Acadia Healthcare Company, Inc. Quote
Q3 Operations
Total U.S. same-facility revenues amounted to $744.9 million, which advanced 13% year over year in the third quarter and surpassed the Zacks Consensus Estimate of $698 million. The improvement can be attributed to 6.6% growth in revenue per patient day and a 6% rise in patient days. Admissions rose 5.1% year over year in the quarter under review, higher than our growth estimate of 4.9%. The average length of stay inched up 0.9% year over year.
In the overall U.S. facility, patient days and admissions increased 5.5% each on a year-over-year basis in the third quarter. Revenue per patient day grew 6.7% year over year, higher than our growth estimate of 5.4%. However, the average length of stay remained flat year over year.
Adjusted EBITDA, excluding income from the Provider Relief Fund (“PRF”), was $175.9 million in the quarter under review. The figure improved 13.4% year over year and outpaced our estimate of $171.1 million. The adjusted EBITDA margin, excluding income from the PRF, improved 10 basis points year over year to 23.4% in the quarter under review but came lower than our estimate of 23.8%.
Total expenses of $1,037.7 million jumped 82.2% year over year due to higher salaries, wages and benefits, professional fees, other operating expenses and legal settlements expenses.
Financial Update (as of Sep 30, 2023)
Acadia Healthcare exited the third quarter with cash and cash equivalents of $99.6 million, which grew 2% from the figure at 2022 end. It had a leftover capacity of $520 million under its $600 million revolving credit facility at the third-quarter end.
Total assets of $5,346.2 million rose 7.2% from the 2022-end level.
Long-term debt amounted to $1,350 million, which dipped 1.1% from the figure as of Dec 31, 2022. The current portion of the long-term debt totaled $26.6 million.
Total equity decreased 3.6% from the 2022-end level to $2,712.6 million. The net leverage ratio was around 2X at the third-quarter end.
ACHC generated net cash from operations of $346 million in the first nine months of 2023, which climbed 29.6% from the prior-year comparable period.
Business Update
In the third quarter, Acadia Healthcare opened two behavioral health hospitals, as part of its joint ventures with Bronson Healthcare and Geisinger. It also inaugurated two comprehensive treatment centers (CTCs). Additionally, it added three outpatient programs in the quarter under review, thereby broadening its suite of treatment options.
ACHC remains on track to meet its target of adding 300 beds by the end of this year. It is optimistic to achieve its objective of opening a total of six CTCs in 2023. It is also on course to inaugurate two de novo acute inpatient hospitals by the end of 2023.
2023 Guidance Updated
Revenues are currently anticipated to lie between $2.90 billion and $2.92 billion, up from the previous guidance of $2.86-$2.90 billion. The midpoint of the revised outlook indicates an improvement of 11.5% from the 2022 reported figure.
Adjusted EBITDA, excluding income from the PRF, is presently estimated to be between $665 million and $675 million. The midpoint of the guidance suggests 12.9% growth from the 2022 figure.
Adjusted earnings per share (EPS), excluding income from the PRF, are currently projected within $3.33-$3.43 for this year. The midpoint of the outlook implies a rise of 12.3% from the 2022 figure.
Interest expenses are still forecasted to remain between $82 million and $85 million. Depreciation and amortization expenses are still estimated within $125-$135 million for 2023. The tax rate continues to be expected within 25-26%. Stock compensation expenses are still projected to lie between $30 million and $35 million.
Operating cash flows continue to be expected within $450-$500 million.
Expansion capital expenditures are presently anticipated to lie between $300 million and $350 million, down from the earlier view of $350-$400 million. Maintenance capital expenditures are still forecasted within $40-$50 million, while IT capital expenditures are expected to stay in the $35-$45 million band.
Zacks Rank
Acadia Healthcare currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Medical Sector Releases
Of the Medical sector players that have reported third-quarter 2023 results so far, the bottom-line results of Humana Inc. HUM, West Pharmaceutical Services, Inc. WST and Merit Medical Systems, Inc. MMSI beat the Zacks Consensus Estimate.
Humana delivered a third-quarter 2023 adjusted EPS of $7.78, surpassing the Zacks Consensus Estimate by 8.8%. This represents 6.4% year-over-year growth in the bottom line. HUM's adjusted revenues also saw substantial growth, rising 18.2% compared with the previous year and reaching $25.5 billion. Additionally, the top line exceeded the consensus estimate by 0.6%. Total premiums amounted to $25.1 billion, which improved 16.9% year over year in the third quarter. Investment income of $308 million increased 79.1% year over year in the quarter under review. As of Sep 30, 2023, the total medical membership of the segment was 16.96 million. The figure dipped 0.8% year over year.
West Pharmaceutical’s third-quarter 2023 adjusted EPS of $2.16 improved 6.4% year over year. The figure beat the Zacks Consensus Estimate by 16.1%. It registered net sales of $747.4 million in the third quarter, up 8.8% year over year. The figure beat the consensus estimate by 0.1%. WST recorded organic net sales growth of 5.7% in the reported quarter. Net sales in the Proprietary Products segment were $602.5 million, indicating year-over-year growth of 6.3% reportedly and 3.2% organically. Adjusted operating profit totaled $180.8 million, indicating a decline of 3% from the prior-year quarter’s level. The adjusted operating margin contracted 290 bps to 24.2%.
Merit Medical’s third-quarter 2023 adjusted EPS of 75 cents rose 17.2% year over year. The figure also surpassed the Zacks Consensus Estimate by 15.4%. MMSI registered revenues of $315.2 million in the third quarter, up 9.8% year over year. The figure surpassed the consensus estimate by 2.9%. The Cardiovascular unit reported third-quarter revenues of $306.1 million, up 9.7% both on a reported basis and at constant exchange rate (CER) year over year. Endoscopy devices’ revenues totaled $9.1 million, up 11.2% year over year both on a reported basis and at CER. Adjusted operating profit totaled $35.7 million, reflecting an 82.4% jump from the prior-year quarter. The adjusted operating margin in the third quarter expanded 451 bps to 11.3%.
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