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Acadia Healthcare (ACHC) Q1 Earnings Beat on Higher Patient Volumes

Shares of Acadia Healthcare Company, Inc. ACHC declined 4.9% since it reported first-quarter 2023 results on Apr 26. Despite reporting better-than-expected earnings, investor sentiments might have been hurt by the significant rise in ACHC’s expense level. Nevertheless, the downside was partially offset by growing admissions as a result of sustained demand for its behavioral healthcare services.

ACHC reported first-quarter 2023 adjusted earnings of 75 cents per share, which outpaced the Zacks Consensus Estimate by 5.6% and our estimate of 70 cents per share. The bottom line advanced 11.9% year over year.

Total revenues climbed 14.2% year over year to $704.3 million in the quarter under review. The top line beat the consensus mark by 4.2% and our estimate of $690.6 million.

Acadia Healthcare Company, Inc. Price, Consensus and EPS Surprise

Acadia Healthcare Company, Inc. Price, Consensus and EPS Surprise
Acadia Healthcare Company, Inc. Price, Consensus and EPS Surprise

Acadia Healthcare Company, Inc. price-consensus-eps-surprise-chart | Acadia Healthcare Company, Inc. Quote

Q1 Operations

Total U.S. same-facility revenues of $694.9 million improved 13.3% year over year, thanks to a 6.4% rise in revenue per patient day and 6.5% growth in patient days. Admissions grew 8.6% year over year in the first quarter. However, the average length of stay declined 1.9% year over year.

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In the overall U.S. facility, both revenue per patient day and patient days rose 6.9% year over year in the quarter under review. Admissions registered year-over-year growth of 10.4%. Yet, the average length of stay fell 3.2% year over year.

Adjusted EBITDA advanced 11.6% year over year to $151.3 million in the first quarter, higher than our estimate of $149.4 million. The adjusted EBITDA margin of 26.5% improved 20 basis points year over year.

Total expenses came in at $618.6 million, which escalated 15.1% year over year mainly due to higher salaries, wages and benefits, professional fees, depreciation and amortization and interest expenses. The figure also came higher than our estimate of $580.8 million.

Acadia Healthcare added 106 beds to its existing operations in the quarter under review.

Financial Update (as of Mar 31, 2023)

Acadia Healthcare exited the first quarter with cash and cash equivalents of $63.8 million, which dropped 34.6% from the figure at 2022 end. It had $485 million left under its $600 million revolving credit facility at the first-quarter end.

Total assets of $5,044.3 million inched up 1.1% from the 2022-end level.

Long-term debt amounted to $1,399.8 million, which increased 2.6% from the figure as of Dec 31, 2022. The current portion of the long-term debt was $21.3 million.

Total equity of $2,839.6 million inched up 1% from the 2022-end level. The net leverage ratio stood at around 2.2X at the first-quarter end.

In the reported quarter, net cash provided by operating activities of $44.4 million plunged 42.2% year over year.

2023 Outlook Reiterated

Revenues are anticipated to lie within $2.82-$2.88 billion, the midpoint of which indicates an improvement of 9.2% from the 2022 reported figure.

Acadia Healthcare is on track to add 300 beds to its existing facilities this year. It is also set to inaugurate a minimum of six comprehensive treatment centers in 2023.

Adjusted EBITDA is forecasted to stay between $635 million and $675 million, the midpoint of which suggests 6.5% growth from the 2022 figure.

Adjusted earnings per share is estimated in the $3.10-$3.40 band, the midpoint of which implies growth of 8% from the 2022 reported figure.

Interest expenses are predicted to be $80-$85 million for 2023, while the tax rate is expected within 25-26%.

Operating cash flows are anticipated to lie between $450 million and $500 million. Capital expenditures for expansion initiatives are estimated to stay between $350 million and $400 million, while the same for maintenance is projected to be $40-$50 million. IT capital expenditures are expected to stay in the $35-$45 million band.

Zacks Rank

Acadia Healthcare currently carries a Zacks Rank #3 (Hold).  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Medical Sector Releases

Of the Medical sector players that have reported first-quarter 2023 results so far, the bottom-line results of Elevance Health, Inc. ELV, HCA Healthcare, Inc. HCA and Abbott Laboratories ABT beat the respective Zacks Consensus Estimate.

Elevance Health’s first-quarter 2023 earnings of $9.46 per share beat the Zacks Consensus Estimate of $9.26 and our estimate of $9.22. Additionally, the bottom line advanced 15.5% year over year. ELV’s operating revenues improved 10.6% year over year to $41,898 million in the quarter under review. The top line beat the consensus mark by 2.5% and came higher than our estimate of $40,766.5 million. Medical membership of Elevance Health, as of Mar 31, 2023, totaled 48.1 million, which rose 2.9% year over year in the first quarter.

HCA Healthcare’s first-quarter 2023 adjusted earnings of $4.93 per share surpassed the Zacks Consensus Estimate by 23.6%. Also, the bottom line climbed 19.7% year over year. HCA’s revenues advanced 4.3% year over year to $15.6 billion. The top line beat the consensus mark by 2% and our estimate of $15.2 billion. While same-facility equivalent admissions rose 7.5% year over year in the first quarter, same-facility admissions improved 4.4% year over year.

Abbott Laboratories reported first-quarter 2023 adjusted earnings of $1.03 per share, which exceeded the Zacks Consensus Estimate by 5.1%. The adjusted figure declined from the prior-year quarter’s levels by 40.5%. First-quarter worldwide sales of $9.74 billion were down 18.1% year over year on a reported basis. The top line exceeded the Zacks Consensus Estimate by 1.1%. ABT reported an adjusted operating profit of $2.00 billion for the quarter under review, down 41.6% year over year. Adjusted operating margin also contracted 827 bps to 20.5%.

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