• Total Revenue: $816 million, an increase of 8.7% over Q3 2023.
• Same Facility Revenue Growth: 8.6% compared to Q3 2023.
• Patient Day Growth: 4.7% increase.
• Revenue per Patient Day: Increased by 3.6%.
• Adjusted EBITDA: $194.3 million, a growth of 10.5% over the prior year.
• Adjusted EBITDA Margin: 23.8%, up from 23.4% last year.
• Net Leverage Ratio: Approximately 2.5 times.
• Cash and Cash Equivalents: $82.1 million as of September 30, 2024.
• Available Credit Facility: $321.5 million under a $600 million revolving credit facility.
• Guidance for 2024 Revenue: $3.15 billion to $3.165 billion.
• Guidance for 2024 Adjusted EBITDA: $725 million to $735 million.
• Guidance for 2024 Adjusted EPS: $3.35 to $3.45.
• Bed Growth Targets: On pace to complete construction on approximately 1,200 beds in 2024.
• Facility Closures: Closed two subscale satellite programs comprising 104 beds in Q3.

• Warning! GuruFocus has detected 6 Warning Signs with SABR.

Release Date: October 31, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Acadia Healthcare Co Inc (NASDAQ:ACHC) reported strong third-quarter results with total revenue of $816 million, representing an 8.7% growth over the same period last year.
• Adjusted EBITDA grew by 10.5% year-over-year, demonstrating solid operating leverage.
• The company is on track to complete construction on approximately 1,200 beds this year, including nearly 700 beds in the fourth quarter, which will help meet the increasing demand for behavioral health services.
• Acadia Healthcare Co Inc (NASDAQ:ACHC) has made significant investments in technology to enhance patient and staff safety, including wearable remote patient monitoring systems and electronic medical records.
• The company maintains a strong financial position with $82.1 million in cash and cash equivalents and a net leverage ratio of approximately 2.5 times, providing flexibility for strategic investments.

Negative Points

• Acadia Healthcare Co Inc (NASDAQ:ACHC) is facing legal scrutiny, including a subpoena from the SEC and ongoing investigations related to admissions, length of stay, and billing practices.
• The company experienced lower-than-expected volume growth in October, attributed to recent negative media coverage, impacting their revenue and EBITDA guidance for the fourth quarter.
• There is a potential risk of sustained volume pressure if the negative media impact persists, which could necessitate cost structure adjustments.
• The company decided to close two subscale satellite programs, resulting in a reduction of 104 beds, which may impact future revenue.
• Despite investments in technology and quality improvements, the company faces challenges in maintaining referral sources and addressing concerns raised by media reports.

Q & A Highlights

Q: Can you explain the recent deceleration in growth and whether it's concentrated in specific markets due to media dynamics? A: Heather Dixon, CFO: We observed a step down in growth starting in October, which remained stable throughout the month. The recent news coverage and investigation have had a moderating effect, but we believe this is temporary. The impact is not concentrated in specific markets but is more broad-based.

Q: Are there any impacts on joint venture discussions or clinician recruitment due to recent media articles? A: Christopher Hunter, CEO: Our JV pipeline remains robust, and we continue to attract and retain talent. While there are questions from partners and employees, our investments in technology and employee engagement have been well-received.

Q: What are your preliminary thoughts on 2025, including potential headwinds and tailwinds? A: Heather Dixon, CFO: We expect volume growth to continue, supported by new bed additions. Rate discussions with payers are positive, and we anticipate benefits from the Tennessee supplemental payment program. Start-up costs will increase due to new bed additions, but these will contribute to EBITDA growth by the end of 2025.

Q: How are you addressing concerns from referral sources and JV partners following recent media reports? A: Christopher Hunter, CEO: We are actively engaging with stakeholders to address concerns, emphasizing our quality care and investments in safety and compliance. We've been transparent about our practices and have seen positive responses from referral sources after clarifying misunderstandings.

Q: Have you seen any impact on hiring or retention due to legal scrutiny? A: Christopher Hunter, CEO: There has been no material impact on hiring or retention. We continue to attract talent, supported by our investments in technology and employee engagement initiatives. We remain communicative and transparent with our staff.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.