Will US Business Strength Aid Acadia's (ACHC) Q2 Earnings?
Acadia Healthcare Company, Inc. ACHC is scheduled to release second-quarter 2023 results on Jul 27, after the closing bell. The main focus of the behavioral healthcare facility operator’s earnings release will be on the performance of its sole operating U.S. segment. Growing patient volumes at its healthcare facilities, partly offset by an elevated expense level, are expected to have shaped the unit’s quarterly performance.
Also read: (Here's What to Expect From Acadia Healthcare's Q2 Earnings) to find out how the company’s overall second-quarter performance is expected to have been.
U.S. Operations
Acadia Healthcare operates acute inpatient psychiatric facilities, specialty treatment facilities, comprehensive treatment centers (CTCs) and residential treatment centers under the U.S. business. Revenues of ACHC are primarily derived from offering high quality behavioral healthcare services at the above-mentioned facilities in return for which they are entitled to payments from state governments for treating Medicaid patients, commercial insurers, the federal government for catering to Medicare customers and, individual patients and clients. It operated 250 behavioral healthcare facilities equipped with around 11,100 beds, scattered across 39 states and Puerto Rico as of Mar 31, 2023.
Highlights of U.S. Business in Q1
U.S. same-facility admissions grew 8.6% year over year in the first quarter. Revenue per patient day improved 6.4% year over year, while patient days witnessed 6.5% year-over-year growth. However, the average length of stay declined 1.9% year over year.
In the overall U.S. facility, both revenue per patient day and patient days advanced 6.9% year over year. Admissions climbed 10.4% year over year. Yet, the average length of stay tumbled 3.2% year over year.
Projection Metrics for Q2
Revenues of the U.S. business are likely to have benefited on the back of an expanding base at its acute inpatient psychiatric facilities, specialty treatment facilities, CTCs and residential treatment centers in the second quarter. Patient volumes remain the most significant contributor to a healthcare facility operator’s top line. We estimate U.S. same-facility admissions to improve 4.9% year over year in the to-be-reported quarter.
An aging U.S. population and continued incidence of mental health issues among Americans are likely to have sustained the solid demand for services provided by ACHC’s healthcare facilities.
Our estimate for revenues from acute inpatient psychiatric facilities is $359.5 million, which indicates 8.1% year-over-year improvement in the second quarter. We anticipate residential treatment centers to bring in revenues of $76.8 million, up 1.8% year over year.
Acadia Healthcare remains quite active with expansion endeavors either in the form of adding beds to its existing facilities or teaming up with leading U.S. healthcare organizations to inaugurate facilities. This, in turn, is expected to have fetched higher patient volumes and subsequently, driven top-line growth in the to-be-reported quarter.
Improved patient days and higher revenue per patient day are likely to have imparted strength to ACHC’s U.S. operations. We expect U.S. same facility patient days to witness 1.6% year-over-year growth in the second quarter, while our estimate for revenue per patient day on a same-facility basis indicates a 4.7% improvement on a year-over-year basis.
Despite promising growth prospects, the company’s U.S. business is likely to have taken a hit in the to-be-reported quarter from the reduced average length of stay. We estimate average length of stay on a same-facility basis to decline 3.2% year over year in the second quarter.
The unit is also expected to have grappled with escalating salaries, wages and benefits stemming from an acute staff shortage. The supply costs and, salaries, wages and benefits are likely to have increased 12% and 10.5% year over year, respectively. This is likely to have reduced profit levels in the quarter under discussion, making an earnings beat uncertain.
Overall Q2 Estimates
The Zacks Consensus Estimate for Acadia Healthcare’s second-quarter earnings per share is pegged at 83 cents, which implies a decline of 1.2% from the prior-year quarter’s reported figure. The consensus mark for revenues stands at $707 million, suggesting 8.4% growth from the year-ago quarter’s reported number.
Acadia Healthcare’s bottom line beat estimates in two of the trailing four quarters, matched the mark once and missed the same on the remaining one occasion, the average surprise being 2.33%.
Acadia Healthcare Company, Inc. Price and EPS Surprise
Acadia Healthcare Company, Inc. price-eps-surprise | Acadia Healthcare Company, Inc. Quote
Our proven model does not conclusively predict an earnings beat for Acadia Healthcare this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. However, that’s not the case here, as you see below.
Acadia Healthcare has an Earnings ESP of 0.00% and a Zacks Rank of 3.
You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Stocks to Consider
While an earnings beat looks uncertain for Acadia Healthcare, here are some companies from the Medical space, which according to our model, have the right combination of elements to beat on earnings this time around:
Select Medical Holdings Corporation SEM has an Earnings ESP of +23.65% and a Zacks Rank of 1, currently. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for SEM’s second-quarter 2023 earnings is pegged at 49 cents per share, indicating a rise of 14% from the prior-year quarter’s reported figure.
The consensus mark for Select Medical’s second-quarter earnings has moved 11.4% north over the past seven days.
Zimmer Biomet Holdings, Inc. ZBH has an Earnings ESP of +2.34% and a Zacks Rank of 2, currently. The Zacks Consensus Estimate for ZBH’s second-quarter 2023 earnings is pegged at $1.82 per share. The consensus mark for second-quarter earnings has moved 0.6% north in the past seven days.
Zimmer Biomet’s earnings beat estimates in each of the trailing four quarters, the average surprise being 7.38%.
Collegium Pharmaceutical, Inc. COLL has an Earnings ESP of +5.09% and a Zacks Rank of 3, currently. The Zacks Consensus Estimate for COLL’s second-quarter 2023 earnings is pegged at $1.22 per share, indicating an nine-fold increase from the year-ago quarter’s reported figure.
The consensus mark for Collegium Pharmaceutical’s second-quarter earnings has moved 0.8% north over the past seven days.
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Select Medical Holdings Corporation (SEM) : Free Stock Analysis Report
Acadia Healthcare Company, Inc. (ACHC) : Free Stock Analysis Report
Zimmer Biomet Holdings, Inc. (ZBH) : Free Stock Analysis Report
Collegium Pharmaceutical, Inc. (COLL) : Free Stock Analysis Report
