Acadia Healthcare (ACHC) Q4 Earnings Miss, Revenues Meet

Acadia Healthcare Company, Inc. ACHC 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.

Business Update

On Feb 15, 2019, the company closed two previously announced acquisitions, Mission Treatment and The Whittier Pavilion.

Our Take

Acadia Healthcare’s operating performance has been favorable for the past many years with consistently rising revenues. The company is in the process of opening approximately 700 new beds to existing facilities and new facilities in 2019, which should further fuel top-line growth. The company is well positioned for long-term growth on the back of its inorganic strategies.

Zacks Rank and Other Releases

Acadia Healthcare carries a Zacks Rank #2 (Buy). Among the other firms in the hospital industry that have reported fourth-quarter earnings so far, the bottom line of Tenet Healthcare Corporation THC, Universal Health Services, Inc. UHS and HCA Healthcare, Inc. HCA beat the respective Zacks Consensus Estimate by 112.5%,0.9%, 15.4%, respectively.  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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