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Why Is Acadia Healthcare (ACHC) Up 2.6% Since Last Earnings Report?

A month has gone by since the last earnings report for Acadia Healthcare (ACHC). Shares have added about 2.6% in that time frame, underperforming 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 the most recent earnings report in order to get a better handle on the important drivers.

Acadia Healthcare Q2 Earnings Meet Estimates

Acadia Healthcare Company, Inc. reported second-quarter 2018 adjusted earnings of 70 cents per share, which remains in line with the Zacks Consensus Estimate. Meanwhile, the bottom line improved 6.1% year over year.

Better-than-expected earnings were driven by revenue growth led by additional beds.

Quarterly Details

Revenues of Acadia Healthcare rose 7% to $765.7 million from the prior-year quarter's level. However, the top line missed the Zacks Consensus Estimate by 0.2%.

Total same facility revenues grew 5.2% with a 1.7% increase in patient days and a 3.4% rise in revenues per patient day. This growth can be attributed to the row of 155 beds supplemented in the existing facilities during the second quarter. The company expects to add more than 800 beds to current and new facilities in 2018.

U.S. same facility revenues were up 5% from the year-ago quarter. The company also recorded a 1.9% increase in patient days year over year and 3.1% growth in revenue per patient day.

U.K. same facility revenues rose 5.6% year over year to $256.4 million. The number of patient days inched up 1.6% from the year-earlier period whereas revenues per patient per day were up 3.9%.

Acadia Healthcare's consolidated adjusted EBITDA was $165 million, up 1.8% year over year.

Total expenses climbed 7.2% year over year to $696 million due to higher salaries, professional fees, wages and benefits, depreciation and amortization as well as rents and leases.

Financial Update

Cash and cash equivalents as of Jun 30, 2018 were $79.4 million, up 18.1% from the 2017-end level.

Long-term debt was $3.18 billion as of Jun 30, 2018, down 0.5% from the 2017-end level.

Net cash provided by operating activities at the end of six months was $217 million, up nearly 16% year over year.

2018 Guidance

For 2018, the company expects adjusted earnings per share between $2.52 and $2.56 (down from the previous projection of $2.58 and $2.62) on revenues of $3.02-$3.06 billion (down from the earlier estimate of $3.04-$3.08 billion). Adjusted EBITDA is anticipated between $632 million and $639 million (compared with the former forecast of $637-$644 million).

The company now projects an exchange rate of $1.30 per British Pound Sterling (in comparison to the past prediction of $1.35) and interest expense to be around $95 million for the second half of the 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 -5.35% due to these changes.

VGM Scores

At this time, Acadia Healthcare has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. 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.

Our style scores indicate that the stock is more suitable for value investors than growth investors.

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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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