Here's Why Investors Should Retain Acadia Healthcare (ACHC)
Acadia Healthcare Company, Inc. ACHC is aided by expanding patient volumes in its U.S. business, an extensive healthcare network resulting from numerous joint ventures (JVs) and other expansion initiatives, as well as a commendable financial position.
Zacks Rank & Price Performance
Acadia Healthcare currently carries a Zacks Rank #3 (Hold).
The stock has lost 8.4% in the past three months compared with the industry’s 14.3% fall. The Zacks Medical sector and the S&P 500 composite have declined 6.8% and 0.2%, respectively, in the same time frame.
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Favorable Style Score
ACHC boasts an impressive VGM Score of A. VGM Score helps identify stocks with the most attractive value, the best growth and the most promising momentum.
Robust Growth Prospects
The Zacks Consensus Estimate for Acadia Healthcare’s 2023 earnings is pegged at $3.40 per share, indicating an improvement of 13% from the prior-year reading, while the same for revenues stands at $2.9 billion, implying an 10.4% increase from the prior-year actual.
The consensus mark for 2024 earnings is pegged at $3.75 per share, suggesting 10.2% growth from the 2023 estimate. The same for revenues stands at $3.1 billion, which indicates a rise of 9.1% from the 2023 estimate.
Northbound Estimate Revision
The Zacks Consensus Estimate for 2023 earnings has been revised upward 0.9% in the past 30 days.
Decent Earnings Surprise History
ACHC’s bottom line surpassed earnings estimates in two of the trailing four quarters, matched the mark once and missed the same in the remaining one occasion, the average surprise being 2.77%.
Business Tailwinds
A strong U.S. business, gaining from solid patient volumes and operational efficiencies, drives Acadia Healthcare’s top line. Continued incidence of mental health issues among Americans is expected to sustain the solid demand for behavioral healthcare services, which in turn is likely to continue benefiting its revenues in the days ahead. Management forecasts 2023 revenues to be within $2.86-$2.90 billion, the midpoint of which implies a 10.3% improvement from the 2022 reported figure.
Acadia Healthcare follows a commendable growth strategy, as part of which it pursues acquisitions, adds beds to its existing facilities and has JVs with renowned U.S. health systems. ACHC remains on track to achieve its target of adding around 300 beds to its existing facilities this year, out of which it has already added 204 beds in the first half of 2023.
Strong nationwide demand for the medication-assisted treatment of patients suffering from opioid use disorder may prompt Acadia Healthcare to expand its network of comprehensive treatment centers (CTCs) in the days ahead. ACHC aims to open a minimum of six CTC’s this year.
The JV’s enable the behavioral healthcare facility operator to inaugurate new facilities and subsequently, expand its healthcare network and nationwide reach. It has 20 JVs in place, out of which the most recent one was with Nebraska Methodist Health System for building a behavioral health hospital across Iowa and equipping Acadia Healthcare to enter a new state with its acute service line.
The portfolio of ACHC comprised 250 behavioral healthcare facilities stretched throughout 39 states and Puerto Rico as of Jun 30, 2023.
Acadia Healthcare boasts a strong financial position, supported by solid cash reserves, which remains sufficient enough to service its short-term debt obligations. It also had $505 million available under its $600 million revolving credit facility as of Jun 30, 2023. Adequate cash-generating abilities also bear testament to its financial strength, which equips it to undertake uninterrupted business investments. ACHC’s leverage ratio has been improving for a while.
Stocks to Consider
Some better-ranked stocks in the Medical space are LeMaitre Vascular, Inc. LMAT, HCA Healthcare, Inc. HCA and Alcon Inc. ALC. LeMaitre Vascular currently sports a Zacks Rank #1 (Strong Buy), and HCA Healthcare and Alcon carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
LeMaitre Vascular's earnings surpassed estimates in two of the last four quarters and missed the mark twice, the average surprise being 2.27%. The Zacks Consensus Estimate for LMAT's 2023 earnings indicates a rise of 21.5%, while the same for revenues suggests an improvement of 20.8% from the respective year-ago actuals. The consensus mark for LMAT's 2023 earnings has moved 8.3% north in the past 60 days.
The bottom line of HCA Healthcare beat estimates in three of the trailing four quarters and missed the mark once, the average beat being 5.42%. The Zacks Consensus Estimate for HCA’s 2023 earnings indicates a rise of 9.4%, while the same for revenues suggests an improvement of 6% from the respective year-ago actuals. from the prior-year tallies. The consensus mark for HCA’s 2023 earnings has moved 2% north in the past 60 days.
Alcon's earnings outpaced estimates in three of the trailing four quarters and matched the mark once, the average surprise being 8.03%. The Zacks Consensus Estimate for ALC's 2023 earnings indicates a rise of 22.8%, while the same for revenues suggests an improvement of 9.5% from the respective year-ago actuals. The consensus mark for ALC’s 2023 earnings has moved 1.1% north in the past 30 days.
Shares of LeMaitre Vascular, HCA Healthcare and Alcon have gained 17.1%, 13.9% and 3.2%, respectively, in the past three months.
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