Acadia Healthcare (ACHC) Down 42.6% Since Last Earnings Report: Can It Rebound?

A month has gone by since the last earnings report for Acadia Healthcare (ACHC). Shares have lost about 42.6% in that time frame, underperforming 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 the most recent earnings report in order to get a better handle on the important drivers.

Acadia Healthcare Q4 Earnings Top Mark, Improve Y/Y

Acadia Healthcare Company, Inc.’s fourth-quarter 2019 adjusted earnings of 51 cents per share, beating the Zacks Consensus Estimate by 4.1% and also improving 8.5% year over year.

The company’s impressive results reflect higher revenues, driven by segmental contributions, lower expenses and rise in patient days.

Quarterly Details

Revenues of Acadia Healthcare rose 4.9% year over year to $780.2 million but missed the Zacks Consensus Estimate by 0.6% year over year.

Total same facility revenues grew 4.5% with 0.4% increase in patient days and 4.1% rise in revenues per patient day.

U.S. same facility revenues were up 5.5% year over year to $488.1 million.

The segment also recorded 2.4% year-over-year increase in patient days and 3% growth in revenue per patient day.

U.K. same facility revenues rose 2.7% year over year to $254.3 million. The number of patient days declined 2% from the year-earlier period whereas revenues per patient per day were up 4.7%.

Acadia Healthcare’s consolidated adjusted EBITDA for the fourth quarter of 2019 was $144.4 million compared with $133.9 million for the fourth quarter of 2018.

Consolidated EBITDA margin on same facility basis was 22%, expanding 20 basis points year over year.

Total expenses decreased 27.1% year over year to $790.5 million on the back of null legal settlements expenses, lower loss on impairment, lower transaction-related expenses.

In the reported quarter, the company added 171 beds in total to its operations, of which 150 beds are in the U.S. operations while 21 belong to the U.K. operations.

Financial Update

Cash and cash equivalents as of Dec 31, 2019 were $124.2 million, soaring 145.9% from the level at 2018 end.

Long-term debt was $3.1 billion as of Dec 31, 2019, down 1.7% from the figure as of Dec 31, 2018.

Net cash provided by operating activities for the year was $332.9 million, down 20.1% year over year.

The company exited 2019 with total assets worth $6.8 billion, up 11.4% year over year.

2020 Guidance

For 2020, the company expects adjusted earnings per share between $2.20 and $2.40 on revenues of $3.28-$3.34 billion.

Adjusted EBITDA is anticipated between $610 million and $630 million.
The company expects to add around 600 beds in the United States in 2020.

Depreciation and amortization expense is anticipated in the range of $175-$180 million while interest expense is expected within $172-$177 million. Total capital expenditure for the year is expected between $330 million and $350 million.

Q1 Guidance

Acadia Healthcare also provided guidance for the first quarter of 2020 wherein it expects revenues between $795 million and $805 million. Adjusted EBITDA for the quarter is anticipated between $133 million and $137 million. Meanwhile, adjusted earnings per share are projected in the band of 37-42 cents.

Full-Year Highlights

For the full year, the company posted adjusted earnings of $2.04 per share, down 8.9% year over year. In 2019, the company added a total of 585 hospitals to its current and new facilities.

For 2019, total revenues of $3.1 billion were up 3.2% year over year.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -13.98% due to these changes.

VGM Scores

At this time, Acadia Healthcare has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, 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.