Acadia Healthcare Cancels U.K. Unit Sale On Coronavirus Crisis

By Zacks Investment ResearchStock MarketsMar 23, 2020 12:41AM ET

www.investing.com/analysis/acadia-healthcare-cancels-uk-unit-sale-on-coronavirus-crisis-200518330

Acadia Healthcare Cancels U.K. Unit Sale On Coronavirus Crisis

By Zacks Investment Research | Mar 23, 2020 12:41AM ET

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Acadia Healthcare Company, Inc. (NASDAQ:ACHC) has provided an update regarding the ongoing sale of its U.K business (accounted for 35% of its 2019 revenues) in the light of the ongoing economic turmoil caused by the coronavirus outbreak.

The company has suspended activities related to the sale of its U.K. operations because of the current economic environment, which might not fetch a fair price for the transaction now. In the U.K., the company operates 361 behavioral healthcare facilities with nearly 8,700 beds across England, Wales, Scotland, and Northern Ireland.

Recently, the company launched a formal process regarding the sale of the U.K. business. In this vein, it also solicited and received initial, non-bidding offers from multiple bidders and was in the second phase of the sales process. The transaction was to be completed in the second quarter or early in the third quarter of 2020.

The separation of its underperforming U.K. operations was one of the strategic steps undertaken by the company to improve its profitability, and achieve growth by focusing on more profitable business. This business has been underperforming over the years and negatively impacting the company’s growth. Also, the funds generated from this sale was to be put to use to improve its debt position.

The company mentioned that its balance sheet is strong and that it has adequate liquidity and capital to invest in and grow its business. Acadia Healthcare had $90 million in cash and cash equivalents and full availability under its $500 million revolving credit facility as of Feb 29, 2020.

In the light of the current situation, the company has taken several precautionary measures. However, it is not keeping its treatments on hold as it believes that mental health and substance abuse is not elective.

Recently, the U.S. Centers for Disease Control (CDC) and Prevention asked hospitals to put their elective surgeries on hold to better prepare and make accommodations for potential coronavirus-infected patients.

Year to date, the stock has lost 63.3% compared with the industry’s decline of 45.1%. Other stocks in the same space such as HCA Healthcare, Inc. (NYSE:HCA) , Universal Health Services, Inc. (NYSE:UHS) and Tenet Healthcare Corporation (NYSE:THC) have lost 46.3%, 45.8% and 62.7%, respectively, over the same time frame.

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Acadia Healthcare Cancels U.K. Unit Sale On Coronavirus Crisis

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