Why Is Acadia Healthcare (ACHC) Down 4.5% Since Last Earnings Report?
It has been about a month since the last earnings report for Acadia Healthcare (ACHC). Shares have lost about 4.5% in that time frame, outperforming 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 Q1 Earnings & Revenues Beat Estimates
Acadia Healthcare reported first-quarter 2022 adjusted earnings of 67 cents per share, beating the Zacks Consensus Estimate of 63 cents. The bottom line also increased from 47 cents per share a year ago.
Revenues at Acadia Healthcare improved to $616.7 million for the quarter under review from $551.2 million a year ago. The top line also beat the consensus mark of $606 million.
Higher patient days and average length of stay on growing demand for its behavioral healthcare services drove ACHC’s results. Yet, increased operating expenses and lower U.S. same facility admissions remain a concern for investors. The ongoing staffing challenges in the industry might shoot up costs in the coming days, putting pressure on ACHC’s bottom line.
Q1 Operations
Total U.S. same facility revenues rose 8.6% year over year to $592.3 million on account of a 2.2% improvement in patient days and 6.2% growth in revenue per patient day. Average length of stay increased 4.9% year over year in the first quarter. Yet, admissions dipped 2.6% year over year.
In the overall U.S. facility, revenues increased 11.9% year over year. While patient days rose 4.7% year over year, revenue per patient day increased 6.8% and admissions inched up 2.3%.
Adjusted EBITDA increased to $135.5 million from $119.5 million a year ago. The metric was above management’s guided range of $130-$135 million. Adjusted EBITDA margin also expanded 30 basis points year over year to 22%.
Total expenses increased to $537.3 million from $521.9 million in the prior-year quarter, primarily due to a rise in salaries, wages and benefits, professional fees, supplies, and other operating expenses.
In the first quarter, Acadia Healthcare added 28 beds to its existing operations.
Financial Update (as of Mar 31, 2022)
Cash and cash equivalents of $140.4 million were up from the $133.8 million level recorded on Dec 31, 2021.
Total assets of $4,834.6 million increased from the $4,768.1 million level at 2021 end.
Long-term debt totaled $1,463.8 million, down from $1,478.6 million as of Dec 31, 2021. The current portion of the long-term debt was $21.3 million. At the first-quarter-end, the long-term debt to capitalization was 36.2%.
Acadia Healthcare’s net operating cash flows for the first quarter came in at $76.8 million, up from $76 million a year ago.
2022 Outlook
ACHC reiterated estimation for revenues within $2.55-$2.60 billion for 2022, indicating an increase from the 2021 level of $2.3 billion. Acadia Healthcare aims to add around 300 beds to its existing facilities.
Adjusted EBITDA is projected to be $575-$610 million, implying an increase from $558.7 million in 2021. Adjusted earnings per share are forecast within $2.85-$3.15, calling for a rise from the 2021 level of $2.56.
Operating cash flows (inclusive of $39 million of CARES Act repayments) are expected to be $350-$400 million. While capital expenditures for expansion initiatives are expected within $290-$340 million, the same for maintenance will likely be around $50 million. Further, interest expense is anticipated within $65-$70 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
VGM Scores
Currently, Acadia Healthcare has a nice Growth Score of B, a grade with the same score on the momentum front. 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 A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. 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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