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Why Is Acadia Healthcare (ACHC) Up 11.5% Since Last Earnings Report?

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A month has gone by since the last earnings report for Acadia Healthcare (ACHC). Shares have added about 11.5% in that time frame, outperforming 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 its most recent earnings report in order to get a better handle on the important catalysts.

Acadia Healthcare Q4 Earnings Miss, Revenues Meet

Acadia Healthcare reported fourth-quarter 2018 adjusted earnings of 47 cents per share, missing the Zacks Consensus Estimate by a cent and declining 23% year over year.

Earnings declined due to a rise in expenses that drained EBITDA margin.

Quarterly Details

Revenues of Acadia Healthcare rose 2.6% year over year to $743.5 million and came in line with the Zacks Consensus Estimate.

Total same facility revenues grew 3.8% with a 2.6% increase in patient days and a 1.2% rise in revenues per patient day.

U.S. same facility revenues were up 3.5% year over year to $472.2 million. The segment also recorded a 3.5% year-over-year increase in patient days and flat revenues per patient day.

U.K. same facility revenues rose 4.4% year over year to $271.4 million. The number of patient days inched up 1.5% from the year-earlier period whereas revenues per patient per day were up 2.8%.

Total same facility EBITDA margin declined 240 basis points year over year to 22%.

Total adjusted expenses increased 9% year over year to $724 million due to higher salaries, professional fees, supplies, wages and benefits, interest expenses, depreciation and amortization as well as rents and leases.

In 2018, the company added 651 total beds, which fell short of its target of 800.

Financial Update

Cash and cash equivalents as of Dec 31, 2018 were $50.5 million, down 25% from the 2017-end level.

Long-term debt was $3.16 billion as of Dec 31, 2018, almost unchanged year over year.

Net cash provided by operating activities for 2018 was $416.6 million, up 3.8% year over year.

Full-Year Revenues and Earnings

The company reported revenues of $3 billion, up 7.1% year over year, and earnings per share of $2.24, down 2.6% year over year. Earnings fell short of the company’s estimated range of $2.25 and $2.27 per share.  Revenues, however, came in line with the company’s guidance.

2019 Guidance

For 2019, the company expects adjusted earnings per share between $2.15 and $2.30 on revenues of approximately $3.15-$3.2 billion. Adjusted EBITDA is anticipated between $610 million and $630 million.

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

For the first quarter of 2019, adjusted earnings per share are expected to be in the range of 35-36 cents

 

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 -31.97% due to these changes.

VGM Scores

Currently, Acadia Healthcare has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top quintile 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. Notably, Acadia Healthcare has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.



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